Real Estate Math
An Illinois home sold for $395,000. The buyer paid $15,800 (4%) down. How much PMI would the buyer pay monthly if the PMI rate is 0.8% annually?
A$252.80✓ Correct
B$207.47
C$316.00
D$126.40
Explanation
Loan amount = $395,000 - $15,800 = $379,200. Annual PMI = $379,200 × 0.008 = $3,033.60. Monthly PMI = $3,033.60 ÷ 12 = $252.80. PMI is based on the loan amount, not the property value. At an 80% LTV (20% down), PMI would no longer be required. Buyers who can increase their down payment to 20% can avoid this additional monthly cost.
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