FinanceIntermediateDelaware Exam
What is private mortgage insurance (PMI) designed to protect?
AThe borrower against job loss
BThe lender against borrower default on high-LTV loansCorrect
CThe property against fire and casualty losses
DThe title against defects
Why The lender against borrower default on high-LTV loans Is Correct
Answer B: The lender against borrower default on high-LTV loans
PMI protects the lender (not the borrower) against loss if the borrower defaults. It is typically required when the LTV exceeds 80%, meaning the down payment is less than 20%.
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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