Real Estate Math
A Kentucky home is purchased for $215,000 with a 15% down payment. PMI is required at 0.8% annually. What is the monthly PMI cost?
A$107.88
B$119.46
C$121.33✓ Correct
D$143.33
Explanation
Loan = $215,000 × 85% = $182,750. Annual PMI = $182,750 × 0.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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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