Finance
A Florida buyer is financing with a conventional loan and the purchase price is $300,000 with a 10% down payment. If the lender requires PMI at a rate of 0.8% annually, what is the monthly PMI payment?
A$225
B$180✓ Correct
C$200
D$240
Explanation
Loan amount = $300,000 × (1 − 0.10) = $270,000. Annual PMI = $270,000 × 0.008 = $2,160. Monthly PMI = $2,160 ÷ 12 = $180. PMI is required on conventional loans when the LTV exceeds 80% (less than 20% down). It can be cancelled once the loan balance falls to 80% of original value.
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