In a conventional loan, private mortgage insurance (PMI) is typically required when the down payment is less than:
Correct Answer
C) 20%
PMI is typically required on conventional loans when the borrower makes a down payment of less than 20% (loan-to-value ratio exceeds 80%). PMI protects the lender against loss in case of borrower default.
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Related Topics & Key Terms
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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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