Finance
What is the purpose of private mortgage insurance (PMI) on an Alaska conventional loan?
AIt protects the buyer if the property value drops
BIt protects the lender if the borrower defaults on a loan with less than 20% equity✓ Correct
CIt guarantees the property title against defects
DIt insures the buyer's personal property inside the home
Explanation
PMI protects the lender — not the borrower — in the event of default. It is typically required when the borrower's down payment is less than 20% of the purchase price.
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