Mortgage Broker Licensing Practice Exam · Question
A borrower obtained a mortgage for $300,000 at 4.00% APR with an initial 3-year fixed term. The contract rate was 3.90% compounded semi-annually. What caused the APR to be higher than the contract rate?
The Annual Percentage Rate (APR) includes the contract interest rate plus the cost of any non-interest charges imposed by the lender, such as administration fee
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Question: A borrower obtained a mortgage for $300,000 at 4.00% APR with an initial 3-year fixed term. The contract rate was 3.90% compounded semi-annually. What caused the APR to be higher than the contract rate?
Answer options:
- Prepayment penalties
- Property appraisal fees ✅ Lender fees and charges
- Mortgage broker commission
Correct answer: Lender fees and charges
Explanation: The Annual Percentage Rate (APR) includes the contract interest rate plus the cost of any non-interest charges imposed by the lender, such as administration fees, application fees, or mortgage insurance premiums (if directly funded by the lender). FCAC guidance states that the APR reflects the true cost of borrowing.
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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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