Finance
A Florida homebuyer with a VA loan does not pay private mortgage insurance (PMI) but instead pays a:
AVA mortgage insurance premium (MIP)
BVA funding fee at closing, which helps offset costs to taxpayers✓ Correct
CAnnual guarantee fee to the Department of Veterans Affairs
DHigher interest rate instead of any fee
Explanation
VA loans do not require PMI, but borrowers typically pay a one-time VA funding fee (ranging from about 1.4% to 3.
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Key Terms to Know
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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
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