Finance
In what situation would a lender require 'private mortgage insurance' (PMI)?
AAny time the property is located in a flood zone
BWhen the conventional loan has a loan-to-value ratio greater than 80%✓ Correct
CWhen the borrower has a prior bankruptcy
DWhen the loan exceeds $700,000
Explanation
PMI is required on conventional loans when the down payment is less than 20% of the purchase price, resulting in a loan-to-value ratio above 80%. PMI protects the lender in case of borrower default.
Related Arkansas Finance Questions
- An acceleration clause in a mortgage allows the lender to:
- The secondary mortgage market primarily involves:
- Fannie Mae (FNMA) primarily serves the mortgage market by:
- What is the purpose of a mortgage commitment letter?
- Which type of mortgage features payments that remain constant but are applied entirely to principal (no interest)?
- An interest-only loan requires the borrower to:
- What is a 'due-on-sale' clause in a mortgage?
- The Good Faith Estimate (GFE) was replaced under TRID by the:
Practice More Arkansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arkansas Quiz →