Question 1

An interest adjustment occurs when there is a difference between the date on which you take possession of your home and the date from which your lender calculates your first mortgage payment.

Accepted Answer

A) True 
 B)False

Question 2

A house is sold for $300 000 and appraised for $285 000.What down payment will be needed to qualify for a conventional mortgage?

Accepted Answer

A) $60 000 
B) $57 000 
C) $71 250 
D) $72 000

Question 3

A house valued at $288 000 with a down payment of $63 000 will result in an extra charge for a high ratio mortgage.

Accepted Answer

A) True 
 B)False

Question 4

For someone who has a $300 000 mortgage,at an interest rate of 6.3 percent,which mortgage would be the best choice for increasing one's net worth?

Accepted Answer

A) 22-year amortization with monthly payments 
B) 25-year amortization with accelerated biweekly payments 
C) 22-year amortization with semi-monthly payments 
D) 25-year amortization with weekly payments

Question 5

Online realtor services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

Accepted Answer

A) True 
 B)False

Question 6

In choosing an open mortgage over a closed mortgage,you should consider the likelihood of being able to prepay principal to make up for the higher interest rate on the open mortgage.

Accepted Answer

A) True 
 B)False

Question 7

When selling a home,which of the following costs will you likely incur?

Accepted Answer

A) Loan application fees 
B) Realtor's commission 
C) Insurance premiums 
D) Appraisal fees

Question 8

Peter and Mary make a $25 000 down payment on a $400 000 home.
CMHC charges the following rates on the loan to value ratio: Up to and including 80 percent,2.40 percent; up to 85 percent,2.80 percent; up to 90 percent,3.10 percent; up to 95 percent 4.00 percent.
What will be the CMHC insurance premium?
Illustrate the calculation on the loan insurance premium that Peter and Mary have to pay.

Accepted Answer

The answer of Peter and Mary make a $25 000...

Question 9

Which mortgage option is best in the following scenario.The Jones are purchasing their first home for $250000 and financing with a $200000 mortgage.They expect interest rates to stay the same for the next five years and have no prospects for any increase in their incomes.The prime rate is three percent.

Accepted Answer

A) A five-year closed mortgage at five and a half percent 
B) A four-year closed mortgage at five and a half percent 
C) A five-year open VRM at prime plus three percent 
D) A two-year open convertible VRM at prime plus three percent

Question 10

If Adam's house was purchased for $280 000 five years ago and is worth $296000 now,and his mortgage was $224000 and amortized over 25 years,at four percent interest,compounded semi-annually,what is his equity in his house now? (To the nearest $1000)

Accepted Answer

A) $101 000 
B) $72 000 
C) $85 000 
D) Not enough information given to answer this

Question 11

Sharaz has gross household income of $3800 and wants to qualify for total monthly mortgage financing of $1330.Based on the gross debt service ratio,she should be approved.

Accepted Answer

A) True 
 B)False

Question 12

A fixed-rate mortgage will have a set amount applied to the principal with each monthly payment.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not one of the closing costs in purchasing a home?

Accepted Answer

A) Appraisal fee 
B) Home inspection fee 
C) Prepaid property tax 
D) Moving costs

Question 14

Which of the following is most accurate in a case where a seller neglects to disclose a defect that affects the market value of the home they are selling?

Accepted Answer

A) It is morally repugnant,but commonly done and there is no legal recourse. 
B) It is morally wrong,but is legal due to caveat emptor. 
C) It is morally repugnant,and the seller could be charged for criminal negligence. 
D) It is morally wrong,and the seller could be sued for misrepresentation.

Question 15

Due to the high interest rates charged,a vendor take-back mortgage is generally a worse option than a high ratio mortgage.

Accepted Answer

A) True 
 B)False

Question 16

In order to qualify for a mortgage you must conform with both the gross debt service ratio and total debt service ratio.

Accepted Answer

A) True 
 B)False

Question 17

Chuck obtained a mortgage of $90 000 to finance a $120 000 home.The title insurance will be $400,appraisal fee is $500,land transfer tax is one percent of the value of the property,legal fees are $900,and he will pay $900 to the movers and has planned to send $6000 on renovations.How much are his closing costs?

Accepted Answer

A) $1800 
B) $3900 
C) $2100 
D) $3000

Question 18

When purchasing a home,which of the following costs will you incur?

Accepted Answer

A) Finder's fee 
B) Realtor's commission 
C) Tax arrears payments 
D) Appraisal fee

Question 19

Describe some of the advantages and disadvantages of selling your home yourself instead of hiring a realtor.

Accepted Answer

The answer of Describe some of the advantages and disadvantages...

Question 20

Which of the following is accurate regarding types of mortgages?

Accepted Answer

A) A convertible VRM gives you protection in case interest rates go up. 
B) Open mortgages offer slightly better rates than closed mortgages. 
C) Most fixed-rate mortgages are convertible. 
D) With a variable-rate mortgage your payments will never go up if prime goes up.

Exam 2: Managing Your Financial Resources - Purchasing and Financing a Home

An interest adjustment occurs when there is a difference between the date on which you take possession of your home and the date from which your lender calculates your first mortgage payment.

A house is sold for $300 000 and appraised for $285 000.What down payment will be needed to qualify for a conventional mortgage?

A house valued at $288 000 with a down payment of $63 000 will result in an extra charge for a high ratio mortgage.

For someone who has a $300 000 mortgage,at an interest rate of 6.3 percent,which mortgage would be the best choice for increasing one's net worth?

Online realtor services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

In choosing an open mortgage over a closed mortgage,you should consider the likelihood of being able to prepay principal to make up for the higher interest rate on the open mortgage.

When selling a home,which of the following costs will you likely incur?

If Adam's house was purchased for $280 000 five years ago and is worth $296000 now,and his mortgage was $224000 and amortized over 25 years,at four percent interest,compounded semi-annually,what is his equity in his house now? (To the nearest $1000)

Sharaz has gross household income of $3800 and wants to qualify for total monthly mortgage financing of $1330.Based on the gross debt service ratio,she should be approved.

A fixed-rate mortgage will have a set amount applied to the principal with each monthly payment.

Which of the following is not one of the closing costs in purchasing a home?

Which of the following is most accurate in a case where a seller neglects to disclose a defect that affects the market value of the home they are selling?

Due to the high interest rates charged,a vendor take-back mortgage is generally a worse option than a high ratio mortgage.

In order to qualify for a mortgage you must conform with both the gross debt service ratio and total debt service ratio.

When purchasing a home,which of the following costs will you incur?

Describe some of the advantages and disadvantages of selling your home yourself instead of hiring a realtor.

Which of the following is accurate regarding types of mortgages?