What is the primary difference between borrower-paid mortgage insurance (BPMI) and lender-paid mortgage insurance (LPMI)?
Correct Answer
B) BPMI can be cancelled, while LPMI typically cannot
The key difference is that BPMI can typically be cancelled once certain LTV thresholds are met, while LPMI is built into the loan rate and generally cannot be removed without refinancing, since the lender pays the premium and recovers the cost through a higher interest rate.
Why This Is the Correct Answer
The key difference is that BPMI can typically be cancelled once certain LTV thresholds are met, while LPMI is built into the loan rate and generally cannot be removed without refinancing, since the lender pays the premium and recovers the cost through a higher interest rate.
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Previous Question
An MLO works for a lender that pays a salary plus commission. The commission structure pays 0.75% on the first $300,000 of loan amount and 1% on amounts above $300,000. This compensation plan is:
Next Question
A borrower with a conventional loan has been paying PMI for 2 years. They want to cancel PMI based on improvements made to the property. Under federal law, what is required for PMI cancellation in this scenario?