When a lender requires a buyer to purchase homeowner's insurance as a condition of the loan, the lender is protecting:
Why The lender's security interest in the property Is Correct
Answer B: The lender's security interest in the property
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
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- Under RESPA, a lender may not require a buyer to purchase title insurance from a specific company affiliated with the lender unless:Finance
- A title insurance policy that protects the lender's interest is called a:Escrow & Title
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- Which type of loan insures the lender against loss and allows borrowers to purchase with as little as 3.5% down with a 580+ credit score?Finance
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Key Terms to Know
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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