Mortgage Agent Licensing Practice Exam · Question
What is the primary purpose of mortgage default insurance from the lender's perspective?
Mortgage default insurance protects the lender against losses incurred if a borrower defaults on their mortgage payments. This protection enables lenders to off
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Question: What is the primary purpose of mortgage default insurance from the lender's perspective?
Answer options:
- To protect the borrower from unforeseen circumstances that may lead to default. ✅ To allow lenders to offer mortgages with a lower down payment while mitigating their risk of loss.
- To reduce the interest rate charged to borrowers with a strong credit history.
- To provide a government guarantee on all Canadian residential mortgages.
Correct answer: To allow lenders to offer mortgages with a lower down payment while mitigating their risk of loss.
Explanation: Mortgage default insurance protects the lender against losses incurred if a borrower defaults on their mortgage payments. This protection enables lenders to offer mortgages with lower down payments (high-ratio mortgages) to a broader range of borrowers, thereby facilitating homeownership.
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Question explanations
- Which of the following is NOT a primary provider of mortgage default insurance in Canada?
- When must a mortgage agent provide the borrower with certain disclosures regarding the proposed mortgage, part
- Michael and Jennifer are applying for a mortgage to purchase a home in Calgary for $700,000. Their combined gr
- Which of the following scenarios would typically lead to a higher mortgage interest rate for a borrower?
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