Humber/Ontario Real Estate Course 2 Exam Practice

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Prepare for the Humber/Ontario Real Estate Course 2 Exam with our comprehensive quiz that covers essential concepts and topics. Enhance your understanding with multiple choice questions designed to test your knowledge and boost your confidence before the exam.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What accurately describes mortgage default insurance?

Allows mortgage deals with a minimum 10% down payment.
Protects mortgage borrowers in the event of serious illness.
Known as creditor life insurance.
Available from private insurers and government corporation.

The correct answer is: Available from private insurers and government corporation.

Mortgage default insurance is a type of insurance that protects the lender in case the borrower defaults on the mortgage. This insurance is required by lenders for high-ratio mortgages, where the down payment is less than 20% of the purchase price. Option A is incorrect because mortgage default insurance is typically required for down payments less than 20%, not just a minimum 10% down payment. Option B is incorrect because mortgage default insurance does not protect the borrower in the event of serious illness; it protects the lender. Option C is incorrect because creditor life insurance is a different type of insurance that pays off a specific debt, while mortgage default insurance protects the lender in case of default. The correct answer is D because mortgage default insurance is available from both private insurers and a government corporation in Canada, such as the Canada Mortgage and Housing Corporation (CMHC).