Finance
A Washington borrower is told their mortgage application has a loan-to-value (LTV) of 92% and they must pay mortgage insurance. The borrower asks when PMI can be removed on their conventional loan. The answer is:
APMI on conventional loans can never be removed
BPMI is automatically cancelled when the loan balance reaches 78% of the original appraised value under the Homeowners Protection Act✓ Correct
CThe borrower must refinance to remove PMI
DPMI is removed only when the property appreciates to 20% equity
Explanation
The Homeowners Protection Act (HPA) requires lenders to automatically cancel PMI on conventional loans when the loan balance reaches 78% of the original appraised value (or original purchase price if lower), based on the original amortization schedule.
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