Finance
Private Mortgage Insurance (PMI) is typically required when the buyer's down payment is:
ALess than 5%
BLess than 10%
CLess than 20%✓ Correct
DLess than 25%
Explanation
PMI is typically required on conventional loans when the buyer's down payment is less than 20%, protecting the lender against default.
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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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Math Concepts
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