Finance
A West Virginia buyer takes out a $200,000 conventional loan with a 90% LTV. The lender requires private mortgage insurance (PMI). PMI can be cancelled when:
AThe borrower has made 60 payments
BThe loan balance falls to 80% of the original purchase price✓ Correct
CThe borrower requests cancellation at any time
DThe property appreciates to double its purchase price
Explanation
Under the Homeowners Protection Act, PMI automatically terminates when the loan balance reaches 78% of the original purchase price. Borrowers may request cancellation when the balance reaches 80%, provided they have a good payment history.
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