A Colorado buyer is financing a home with an 80% first mortgage, 10% second mortgage, and 10% down payment (piggyback). One advantage of this structure over a single 90% LTV loan is:
Why Avoiding PMI on the first mortgage since the first mortgage LTV is 80% Is Correct
Answer B: Avoiding PMI on the first mortgage since the first mortgage LTV is 80%
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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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.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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