Finance
Private Mortgage Insurance (PMI) in Georgia can be cancelled when:
AThe loan has been paid for 5 years
BThe borrower has 20% equity in the property based on original purchase price or appraised value✓ Correct
CThe property value doubles
DThe borrower makes 24 consecutive on-time payments
Explanation
Under the Homeowners Protection Act (PMI Cancellation Act), borrowers can request PMI cancellation when their loan balance reaches 80% LTV based on original purchase price. Lenders must automatically cancel PMI at 78% LTV.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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