Humber/Ontario Real Estate Course 2 Exam Practice

What factor is essential when setting the timeframe for a mortgage financing conditional clause during a high-ratio mortgage?

1. Considering the current market conditions

2. Extending the timeframe for higher equity

3. A longer conditional timeframe might be needed

4. Using standard 15-day timeframes universally

5. Adjusting timeframes based on property size

6. Fixing a 7-day period irrespective of market

The correct answer is: A longer conditional timeframe might be needed

When setting the timeframe for a mortgage financing conditional clause during a high-ratio mortgage, a longer conditional timeframe might be needed because high-ratio mortgages typically involve more complex financing terms and approval processes. The lender may require additional time to secure approval for the mortgage due to the higher risk associated with a high-ratio loan. Therefore, it is essential to allow for a longer conditional timeframe in order to accommodate any potential delays in the financing approval process. Option A is incorrect because while considering the current market conditions is important in real estate transactions, it may not directly impact the timeframe for a mortgage financing conditional clause. Option B is incorrect as extending the timeframe for higher equity is not necessarily relevant to setting the timeframe for a mortgage financing conditional clause during a high-ratio mortgage. Option D is incorrect as using a standard 15-day timeframe universally may not be sufficient for the complexities often involved in high-ratio mortgage financing. Option E is incorrect as adjusting timeframes based on property size is not typically a determining factor when setting the timeframe for a mortgage financing conditional clause during a high-ratio mortgage. Option F is incorrect as fixing a 7-day period irrespective of market conditions or loan specifics may not provide enough time for the approval process required for a high-ratio mortgage.