Private Mortgage Insurance (PMI) primarily protects:
Why The lender in case the borrower defaults Is Correct
Answer B: The lender in case the borrower defaults
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
People Also Study
Related California Questions
- Private Mortgage Insurance (PMI) is typically required when a borrower's down payment is:Finance
- A borrower's monthly gross income is $8,500. The lender uses a 43% maximum DTI. The borrower has $850 in existing monthly debt payments. What is the maximum allowable monthly mortgage payment?Real Estate Math
- Private Mortgage Insurance (PMI) is typically required by conventional lenders when the LTV exceeds:Finance
- Which loan program is specifically designed to help veterans purchase homes with no down payment requirement?Finance
- What is private mortgage insurance (PMI) and when is it typically required?Finance
- Title insurance that protects the lender against losses due to title defects is called:Escrow & Title
- A buyer purchases a home for $485,000 and makes a 20% down payment. What is the loan amount?Real Estate Math
- A borrower takes out a $300,000 mortgage at 6% annual interest. What is the first month's interest payment?Real Estate Math
Key Terms to Know
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →