Michigan 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 allows borrowers to secure a home loan with a smaller down payment, typically less than 20%. This enables first-time homebuyers or those with limited savings to enter the housing market more easily.
Option A is incorrect; while sellers may sometimes cover closing costs, PMI premiums are generally the responsibility of the borrower. Option C misrepresents PMI, which protects the lender, not the borrower, for the loan amount. Option D is inaccurate, as PMI does not relate to loan terms upon the borrower's death; it solely addresses risk for lenders regarding default.
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