Humber/Ontario Real Estate Course 4 Exam Practice

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If a mortgage default insurance premium is $3,500 at 1.75% on 84% of the home value, what is the lending value of the home?

$200,000
$238,095
$236,873
$197,600
$210,000
$220,050

The correct answer is: $238,095

To find the lending value of the home based on the given mortgage default insurance premium, we can use the information provided. The mortgage default insurance premium is calculated as a percentage of the loan amount, which in this case is 1.75% of 84% of the home value. Let's break this down: 1. The mortgage default insurance premium is given as $3,500. 2. This premium represents 1.75% of 84% of the home value. To find the home value, we can set up the equation: $3,500 = 1.75% x (84% of home value) First, we convert the percentage to decimal: 1.75% = 0.0175 84% = 0.84 So, we can rewrite the equation as: $3,500 = 0.0175 x (0.84 x home value) Now, solving for the home value: $3,500 = 0.0147 x home value (since 0.0175 x 0.84 = 0.0147) Now, divide both sides by 0.0147: home value = $3,500 / 0.0147