Humber/Ontario Real Estate Course 4 Exam Practice

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What should a prospective home buyer be aware of when planning to obtain a mortgage for a selected property?

Must undergo a credit check prior to viewing any property.
Will ultimately require a downpayment of not less than 25% of the final selling price.
Must complete a mortgage application prior to viewing any property.
Should be aware that the maximum mortgage amount can be influenced by the location, type, and value of the property.
Must get pre-approval from a lender before house hunting.
Must purchase home insurance before receiving mortgage approval.

The correct answer is: Should be aware that the maximum mortgage amount can be influenced by the location, type, and value of the property.

A prospective home buyer should be aware that several factors can influence the maximum mortgage amount they can obtain. These factors include the location of the property, the type of property (such as a single-family home vs. a condo), and the overall market value of the property being considered. Lenders assess the risk associated with each property differently, which can affect the loan-to-value ratio and, subsequently, the amount one can borrow. Understanding these elements helps buyers set realistic expectations for their mortgage options and ensures they are looking at properties within their financial reach. Other options, while important, do not accurately reflect the most crucial consideration when planning to obtain a mortgage. For instance, pre-approval might be beneficial, but it is not universally required before viewing properties. Additionally, while a down payment is part of the mortgage process, it does not have to be a fixed percentage for every property. Similarly, credit checks and mortgage applications are essential parts of the process but should ideally occur after the buyer has selected potential properties, rather than before viewing. Home insurance is typically mandated by lenders but is a step taken after mortgage approval rather than before.