Finance
A Connecticut borrower has a $400,000 home with a $320,000 mortgage. The lender is requiring PMI. Under the Homeowners Protection Act (PMI Cancellation Act), the borrower may request cancellation of PMI when:
AThe loan balance reaches 80% LTV based on the original purchase price or appraised value, whichever is less✓ Correct
BThe borrower has made 12 consecutive on-time payments
CThe property value increases so the LTV drops below 90%
DThe borrower pays off 10% of the original loan amount
Explanation
The Homeowners Protection Act allows borrowers to request PMI cancellation when the loan balance reaches 80% of the original value (purchase price or appraised value at origination, whichever is less). PMI must be automatically terminated at 78% LTV.
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