Illinois Real Estate Exam Practice Question
For the borrower, the major advantage of private mortgage insurance (PMI) for a home mortgage loan is that
Correct Answer: B
Rationale: Private mortgage insurance (PMI) primarily enables borrowers to secure a home mortgage with a smaller down payment, often as low as 3% to 5%. This accessibility allows individuals to enter the housing market sooner, rather than saving for a larger down payment.
Option A is incorrect; the premium is usually paid by the borrower, not the seller. Option C misrepresents PMI, which does not insure the entire loan amount but rather protects the lender against default. Option D is misleading; PMI does not cover loan repayment in the event of the borrower's death; life insurance would be necessary for that protection.
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