An investment property borrower asks about PMI options for their rental property purchase with 15% down. What should the MLO explain about PMI for investment properties?
Correct Answer
C) PMI is generally not available for investment properties on conventional loans
Most PMI companies do not provide coverage for investment properties on conventional loans. Investment property loans typically require higher down payments (often 20-25% minimum) and different risk management approaches. Borrowers seeking lower down payment options for investment properties usually need to explore alternative financing programs.
Why This Is the Correct Answer
Most PMI companies do not provide coverage for investment properties on conventional loans. Investment property loans typically require higher down payments (often 20-25% minimum) and different risk management approaches. Borrowers seeking lower down payment options for investment properties usually need to explore alternative financing programs.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
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Previous Question
A borrower receives a Loan Estimate on Friday at 3 PM via email. The following Wednesday, they discover the property needs a specialized environmental assessment costing $800, which was not disclosed on the LE. What is the earliest the lender can collect this fee?
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When comparing adjustable-rate mortgages, an MLO must disclose the worst-case scenario. For a 3/1 ARM starting at 2.75% with 2% annual caps, 5% lifetime cap, tied to 1-year Treasury + 2.25% margin, what would be disclosed as the maximum payment scenario?