Finance
What is the primary purpose of private mortgage insurance (PMI) in Florida real estate transactions?
ATo protect the buyer from property defects
BTo protect the lender if the borrower defaults on a low down payment loan✓ Correct
CTo insure the title against defects
DTo cover property damage from natural disasters
Explanation
PMI protects the lender (not the borrower) against financial loss if the borrower defaults. It is typically required when the loan-to-value (LTV) ratio exceeds 80%, meaning the down payment is less than 20%.
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