Mortgage Broker Licensing Practice Exam · Question
A mortgage of $250,000 is taken at 6.00% compounded semi-annually with monthly payments over a 25-year amortization period. What is the approximate remaining principal balance after 5 years (60 payments)?
First, calculate the effective monthly rate: (1 + 0.06/2)^(2/12) - 1 = (1.03)^(1/6) - 1 ≈ 0.0049386. Then calculate the monthly payment: PMT = $250,000 [ 0.0049
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Question: A mortgage of $250,000 is taken at 6.00% compounded semi-annually with monthly payments over a 25-year amortization period. What is the approximate remaining principal balance after 5 years (60 payments)?
Answer options:
- $210,000
- $225,000
- $230,000 ✅ $235,000
Correct answer: $235,000
Explanation: First, calculate the effective monthly rate: (1 + 0.06/2)^(2/12) - 1 = (1.03)^(1/6) - 1 ≈ 0.0049386. Then calculate the monthly payment: PMT = $250,000 [ 0.0049386(1 + 0.0049386)^300 ] / [ (1 + 0.0049386)^300 – 1 ] = $1,607.72. Now, calculate the present value of the remaining 240 payments: PV = $1,607.72 [ 1 - (1 + 0.0049386)^-240 ] / 0.0049386 = $234,996.90. So, approximately $235,000.
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Question explanations
- What is the typical time frame for a mortgage agent to provide the required disclosure statement to a client?
- Funds received from a client or investor that the brokerage holds on their behalf must be deposited into:
- Ontario mortgage agents must complete which of the following at each licence renewal?
- Which entity is responsible for licensing and regulating mortgage brokers and agents in Ontario?
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