Finance
Wisconsin borrowers who make a down payment of less than 20% on a conventional loan are typically required to pay:
AA higher application fee
BPrivate mortgage insurance (PMI) until equity reaches 20%✓ Correct
CAn FHA mortgage insurance premium
DA Wisconsin mortgage guarantee fee
Explanation
Conventional loans with less than 20% down require private mortgage insurance (PMI) to protect the lender; PMI can be cancelled once the borrower has 20% equity under the Homeowners Protection Act.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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