Finance (alternative)
A Maryland borrower with excellent credit qualifies for a conventional loan with 20% down. This borrower avoids:
ATitle insurance
BPrivate mortgage insurance (PMI)✓ Correct
CHomeowners insurance
DProperty taxes
Explanation
Conventional loans with 20% or more down payment do not require private mortgage insurance (PMI), saving the borrower a monthly premium expense.
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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.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
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.
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.
Math Concepts
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