Finance
In Rhode Island, private mortgage insurance (PMI) is typically required when the LTV ratio exceeds:
A70%
B80%✓ Correct
C90%
D95%
Explanation
For conventional loans, PMI is typically required when the LTV ratio exceeds 80%, meaning the down payment is less than 20% of the purchase price.
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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.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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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