Mortgage Broker Licensing Practice Exam · Question
After 10 years of payments on a 25-year mortgage with an initial principal of $350,000 at 4.00% compounded semi-annually, what is the approximate outstanding balance?
First, calculate the monthly payment. Effective monthly rate = (1 + 0.04/2)^(1/6) - 1 = 0.00329863. Monthly payments (P) for 25 years (300 months): PMT = $350,0
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Question: After 10 years of payments on a 25-year mortgage with an initial principal of $350,000 at 4.00% compounded semi-annually, what is the approximate outstanding balance?
Answer options:
- $208,600
- $235,500 ✅ $215,900
- $228,100
Correct answer: $215,900
Explanation: First, calculate the monthly payment. Effective monthly rate = (1 + 0.04/2)^(1/6) - 1 = 0.00329863. Monthly payments (P) for 25 years (300 months): PMT = $350,000 * [0.00329863 / (1 - (1 + 0.00329863)^-300)] = $1,838.74. Now, calculate the present value of the remaining 15 years (180 months) of payments: PV = PMT * [1 - (1 + i)^-n] / i = $1,838.74 * [1 - (1.00329863)^-180] / 0.00329863 = $215,900. (Using a financial calculator: PV = 350000, I/Y = 4% semi-annual, N = 300, C/Y=2, P/Y=12, calculate PMT = 1838.74. Then, N = 180, calculate PV = 215,899.96).
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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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