Finance (alternative)
What is the purpose of mortgage insurance (PMI or MIP) in a Maryland home purchase?
ATo protect the buyer if the home is damaged
BTo protect the lender if the borrower defaults on the loan✓ Correct
CTo cover the borrower's life insurance needs
DTo guarantee the property appraises at the purchase price
Explanation
Mortgage insurance (PMI for conventional; MIP for FHA) protects the LENDER—not the borrower—against losses if the borrower defaults on the loan.
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