In Colorado, 'private mortgage insurance' (PMI) can be cancelled by a borrower on a conventional loan when:
Why The loan-to-value ratio reaches 80% based on current value Is Correct
Answer B: The loan-to-value ratio reaches 80% based on current value
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.
People Also Study
Related Colorado Questions
- What is the primary purpose of private mortgage insurance (PMI) on a conventional loan?Finance
- A Colorado property appraises for $385,000 on a $400,000 purchase contract. The lender will only lend 95% of the appraised value. What is the maximum loan amount?Finance
- A Colorado buyer is getting an FHA loan. The property appraises for $310,000 and the purchase price is $320,000. The maximum FHA loan amount (at 96.5% LTV) is based on:Finance
- A property in Colorado sells for $420,000. The buyer makes a 20% down payment and obtains a conventional mortgage. What is the loan amount?Finance
- A Colorado investor is considering a property with a $750,000 purchase price, $65,000 NOI, and $45,000 annual debt service. What is the debt coverage ratio (DCR)?Real Estate Math
- When a Colorado appraiser concludes a value of $425,000 and the owner's purchase price was $450,000, the appraiser should:Property Valuation
- A Colorado investment property sold for $850,000. The original purchase price was $600,000. The owner's capital gains tax rate is 20%. Assuming a $150,000 gain after deducting improvements and depreciation recapture, what is the capital gains tax owed?Real Estate Math
- In Colorado, when a buyer takes title 'subject to' an existing mortgage, the original borrower:Escrow & Title
Key Terms to Know
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
Study This Topic
Practice More Colorado Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →