Humber/Ontario Real Estate Course 3 Exam Practice

When reviewing a residential mortgage application, what key factor is considered?

1. The property's past ownership history

2. The direct involvement of the seller

3. The financial stability of the buyer

4. The local market conditions

5. The timing of the application

6. The intent of the buyer's use

The correct answer is: The financial stability of the buyer

The financial stability of the buyer is indeed a key factor considered when reviewing a residential mortgage application. Lenders assess the buyer’s credit history, income, debts, and overall financial health to determine their ability to repay the loan. A stable income and good credit score typically demonstrate that the buyer is likely to meet monthly mortgage obligations, making this a critical aspect in the lending decision process. While other factors, such as the property’s past ownership history and local market conditions, can influence the overall transaction, they are generally less direct when it comes to assessing the mortgage application itself. The seller's involvement and the timing of the application may provide context or affect the terms of the sale but do not directly impact the mortgage approval process. Additionally, the intent of the buyer’s use may influence the property’s valuation or suitability, but this information does not primarily determine the buyer's ability to make mortgage payments.