Underwriting
Private mortgage insurance (PMI)
Insurance protecting the lender against default on a high-LTV conventional loan
The borrower pays the premium and the lender receives the protection. It is generally required on conventional loans above 80 percent LTV and can be removed as the balance falls to a set threshold.
How the exam asks about it
Two facts carry the items: who pays versus who is protected, and that FHA mortgage insurance follows different rules and does not simply drop off in the same way.
Related terms
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