Finance
Which of the following BEST describes 'private mortgage insurance' (PMI)?
AInsurance that pays off the loan if the borrower dies
BInsurance protecting the lender when the borrower's down payment is less than 20%✓ Correct
CInsurance protecting the buyer from title defects
DInsurance required on all VA loans
Explanation
PMI is required by conventional lenders when the borrower's down payment is less than 20% (LTV above 80%). It protects the lender — not the borrower — against losses if the borrower defaults.
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