Humber/Ontario Real Estate Course 4 Exam Practice

What is NOT an advantage of assuming an existing mortgage?

1. The seller can avoid a payout penalty.

2. The terms of existing financing may be more attractive than the terms currently available for mortgage financing.

3. The seller may obtain a higher selling price as the assumption of an existing mortgage may make the home more saleable.

4. The seller is never financially responsible if the buyer defaults on the assumed mortgage.

5. The process can be completed more quickly.

6. The buyer may be able to negotiate better terms than a new mortgage.

The correct answer is: The seller is never financially responsible if the buyer defaults on the assumed mortgage.

In this scenario, option D is not an advantage of assuming an existing mortgage. When a buyer assumes an existing mortgage on a property, the seller is not completely relieved of financial responsibility. In the event that the buyer defaults on the assumed mortgage, the seller could still potentially be held financially responsible. Therefore, it is important to recognize that although assuming an existing mortgage can have many benefits, such as avoiding a payout penalty, obtaining more attractive financing terms, potentially securing a higher selling price, enabling a quicker process, and allowing for negotiating better terms than a new mortgage, the seller is not entirely free from financial liability in the situation of default by the buyer.