Finance
An FHA loan's mortgage insurance premium (MIP) serves what purpose?
AIt pays the buyer's homeowners insurance
BIt protects the lender against loss if the FHA borrower defaults✓ Correct
CIt guarantees the full value of the home to the seller
DIt covers the cost of the appraisal and inspection
Explanation
FHA mortgage insurance premium (MIP) protects the lender (not the borrower) against losses if the borrower defaults. FHA insures the lender's investment, allowing lenders to offer lower down payments.
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