A buyer in Los Angeles purchases a home for $400,000 using a conventional loan with 10% down payment. The lender requires private mortgage insurance (PMI) at an annual rate of 0.5% of the loan amount. What is the buyer's monthly PMI payment?
Correct Answer
C) $150.00
Down payment = $400,000 × 10% = $40,000. Loan amount = $400,000 − $40,000 = $360,000. Annual PMI = $360,000 × 0.5% = $1,800. Monthly PMI = $1,800 ÷ 12 = $150.00.
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