Humber/Ontario Real Estate Course 4 Exam Practice

When a buyer plans to finance a property, what should they be certain of regarding the mortgage amount?

1. The mortgage amount is influenced by the applicant’s credit score only.

2. The maximum mortgage amount can be influenced by the property's location, type, and value.

3. The mortgage amount remains fixed regardless of property type.

4. The maximum mortgage amount does not depend on the appraisal.

5. The mortgage amount is solely based on the buyer’s income.

6. The maximum mortgage amount is determined by the seller's asking price.

The correct answer is: The maximum mortgage amount can be influenced by the property's location, type, and value.

Choosing to finance a property involves understanding various factors that determine the maximum mortgage amount available to a buyer. The correct choice emphasizes that the maximum mortgage amount can indeed be influenced by elements such as the property's location, type, and value. Lenders assess risk and potential return on their investment, which means they take into account the characteristics of the property being financed. For instance, properties in desirable locations or those that are more valuable are typically easier to finance, as they are likely to hold or appreciate in value over time. Moreover, different property types (single-family homes, multi-unit dwellings, commercial properties) may attract different lending terms or limits based on perceived risk and market demand. Therefore, recognizing how these factors interplay provides a more comprehensive understanding of the mortgage process and helps buyers confidently navigate financing decisions. This knowledge reinforces the importance of evaluating a property’s attributes alongside personal financial considerations when determining the amount one can afford to borrow.