Finance
What is 'private mortgage insurance' (PMI) and when is it required on Nevada conventional loans?
AInsurance required on all Nevada home loans regardless of down payment
BInsurance required on conventional loans when the LTV exceeds 80% (down payment less than 20%)✓ Correct
CA one-time fee required only on FHA loans in Nevada
DInsurance that protects the buyer against property value decline
Explanation
PMI (Private Mortgage Insurance) is required on conventional loans when the loan-to-value ratio exceeds 80% — meaning the buyer puts down less than 20%. PMI protects the lender (not the borrower) against default.
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Key Terms to Know
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.
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.
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
State-Specific Concepts
Continuing EducationDRE Regulation
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