Finance
What is Private Mortgage Insurance (PMI) and when is it typically required?
AA. Insurance protecting buyers against title defects; required on all loans
BB. Insurance protecting the lender against borrower default; typically required when LTV exceeds 80%✓ Correct
CC. Insurance protecting sellers against buyer default; required on all sales
DD. Flood insurance required in FEMA flood zones
Explanation
Private Mortgage Insurance (PMI) protects the lender if the borrower defaults. It is typically required when the loan-to-value ratio exceeds 80% (down payment less than 20%). PMI can be cancelled once the borrower achieves 20% equity.
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