Humber/Ontario Real Estate Course 4 Exam Practice

Which of the following is true regarding a mortgage commitment?

1. It is identical to a buyer's pre-approval

2. It typically includes conditions such as satisfactory title

3. It is a standard form approved by provincial financial authorities

4. It is used exclusively with private lenders

5. It does not include conditional elements

6. It guarantees loan approval without stipulations

The correct answer is: It typically includes conditions such as satisfactory title

A mortgage commitment typically includes conditions such as satisfactory title to ensure that the property being purchased can serve as adequate collateral for the loan. This condition is essential for lenders to mitigate their risks and ensure that the property title is clear and can legally be transferred to the buyer. Therefore, Option B is the correct answer. Options A, C, D, E, and F are incorrect because: A. A mortgage commitment is not identical to a buyer's pre-approval. Pre-approval is an initial step in the mortgage process and does not guarantee loan approval like a mortgage commitment does. C. A mortgage commitment is not a standard form approved by provincial financial authorities. It is a document specific to the lender and borrower outlining the terms and conditions of the loan. D. Mortgage commitments can be obtained from both institutional (such as banks) and private lenders, so it is not used exclusively with private lenders. E. Mortgage commitments typically include conditional elements and do not guarantee loan approval without stipulations. F. While a mortgage commitment indicates the lender's willingness to provide a loan, it does not guarantee loan approval without any stipulations or conditions.