In Florida, a buyer is purchasing a $350,000 home with a conventional loan. The lender requires PMI for loans with less than 20% down payment. If the buyer makes a 15% down payment, what is the loan amount that will require PMI?
Correct Answer
A) $297,500
$297,500 is the correct loan amount ($350,000 × 0.85 = $297,500). Option B is incorrect as it represents an 80% loan-to-value ratio. Option C is incorrect as it represents a 90% loan-to-value ratio. Option D is incorrect as it represents the down payment amount, not the loan amount.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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