Humber/Ontario Real Estate Course 3 Exam Practice

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Prepare for the Humber/Ontario Real Estate Course 3 Exam with our comprehensive quiz. Dive into engaging practice questions that will enhance your understanding and readiness for the test. Elevate your confidence and get ready to ace your exam!

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Given a house value of $232,500 and a mortgage of $202,500, what will the insurance premium be if it's 2% for up to 90% LTV?

$3,760
$4,050
$4,069
$4,650

The correct answer is: $4,050

To determine the correct insurance premium for a mortgage based on the given values, we need to calculate the loan-to-value (LTV) ratio and then apply the insurance premium rate. First, the LTV ratio is calculated by dividing the mortgage amount by the value of the house: LTV = Mortgage Amount / House Value LTV = $202,500 / $232,500 LTV = 0.87, or 87% Since the LTV is 87%, which is below the 90% threshold, the mortgage qualifies for a 2% insurance premium. Next, to find the premium, we multiply the mortgage amount by the insurance percentage: Insurance Premium = Mortgage Amount x Insurance Rate Insurance Premium = $202,500 x 0.02 Insurance Premium = $4,050 This calculation gives us a premium of $4,050, making it the correct answer.