Humber/Ontario Real Estate Course 3 Exam Practice

If an individual with poor credit needs to secure a mortgage, which type of lender are they most likely to approach?

1. Specialize in the secondary market.

2. Operate in the prime market.

3. Focus on the sub-prime market.

4. Concentrate on the money market.

5. Operate in the primary market.

6. Deal exclusively with high-worth clients.

The correct answer is: Focus on the sub-prime market.

An individual with poor credit is most likely to approach a lender that focuses on the sub-prime market. This type of lender is specifically designed to cater to borrowers who do not qualify for conventional loans due to lower credit scores or other financial challenges. Sub-prime lenders understand the nuances of risk associated with these types of borrowers and often offer loans that may come with higher interest rates and less favorable terms as a way to compensate for the increased risk. Other types of lenders, such as those operating in the prime market, primarily serve borrowers with good credit and are less likely to approve loans for someone with poor credit. Similarly, lenders that specialize in the secondary market, the money market, the primary market, or those that deal exclusively with high-worth clients are focused on different clientele and types of transactions that do not address the specific needs of borrowers with credit difficulties. Thus, turning to a sub-prime lender provides the individual with the best chance of securing the necessary financing despite their credit issues.