Finance
A North Dakota homebuyer using a conventional loan at 80% LTV avoids PMI. What does this cost them at purchase if the home costs $320,000?
A$32,000 down
B$48,000 down
C$64,000 down✓ Correct
D$80,000 down
Explanation
To achieve 80% LTV, the buyer must put 20% down. Down payment = $320,000 × 20% = $64,000.
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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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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