Finance
What is the primary purpose of Private Mortgage Insurance (PMI) in a Vermont residential mortgage?
ATo insure the buyer's furniture and personal property
BTo protect the lender against loss if the borrower defaults when LTV exceeds 80%✓ Correct
CTo insure the property against fire and flood
DTo guarantee the seller receives the full purchase price
Explanation
PMI protects the lender—not the borrower—against loss from default when the loan-to-value ratio exceeds 80%. Vermont borrowers must pay PMI until sufficient equity is built up, typically until LTV reaches 78–80%.
Related Vermont Finance Questions
- A mortgage in Vermont creates which type of interest in the property for the lender?
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