Real Estate Math

A Wyoming home is appraised at $340,000. The buyer is obtaining a conventional loan requiring 5% down. What is the mortgage insurance (PMI) base for this loan?

A$17,000
B$323,000✓ Correct
C$340,000
D$289,000

Explanation

Down payment = $340,000 × 5% = $17,000. Loan amount (PMI base) = $340,000 − $17,000 = $323,000. PMI is calculated on the loan amount, not the purchase price.

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