Finance
Vermont's 'private mortgage insurance cancellation' rights under the Homeowners Protection Act (HPA) allow borrowers to request PMI cancellation when:
AThey have made 24 monthly payments
BTheir LTV reaches 80% of the original purchase price or appraised value based on scheduled amortization or actual payments✓ Correct
CThe loan has been outstanding for 5 years
DThe property appreciates 10%
Explanation
The Homeowners Protection Act allows borrowers to request PMI cancellation when their LTV reaches 80% of the original value, and requires automatic cancellation at 78% LTV, protecting borrowers from paying unnecessary PMI.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
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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