Humber/Ontario Real Estate Course 3 Exam Practice

Which of the following is typically part of a residential mortgage review?

1. A full appraisal of property exteriors

2. A property inspection

3. An extensive background check

4. A credit check

5. A site visit by the lender

6. Verification of buyer's employment

The correct answer is: A credit check

The correct answer involves a credit check, which is a fundamental part of a residential mortgage review process. Lenders use credit checks to assess the borrower’s creditworthiness, which helps them determine the risk involved in lending to that specific individual. A strong credit history typically indicates a lower risk, making it more likely for the borrower to be approved for a mortgage. Conducting a credit check helps lenders evaluate the borrower’s ability to manage debt and make timely payments, which are essential factors in determining loan approval and the terms of the mortgage, such as interest rates. This component of the mortgage review process protects both the lender and the borrower, as a credit check can lead to more informed lending decisions. While other elements like property inspections, appraisals, and employment verification may contribute to the broader assessment process, the credit check is the critical step focused specifically on the borrower's financial behavior and history.