Real Estate Math
A Nevada buyer makes a 10% down payment on a $390,000 home. The lender requires the buyer to pay PMI at 0.5% of the original loan balance annually. What is the monthly PMI cost?
A$146.25✓ Correct
B$162.50
C$175.50
D$195.00
Explanation
Loan amount = $390,000 × 0.90 = $351,000.
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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.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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