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Florida Real Estate Exam

Category - Florida

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Regarding Mortgage Insurance Premiums, they benefit the:

Lender in case of default of the borrower
Lender in case of death of the borrower
Borrower in case of death
Lender against delinquency in payments

Explanation

Answer A - A mortgage insurance premium is not a form of life insurance. It is a fund set up with money charged and collected from the borrower at the time the loan is made and paid to FHA. The money is then used to reimburse the lender in the event the borrower defaults on the loan. FHA-backed lenders use mortgage insurance premiums (MIP) as a tool to protect themselves against higher-risk borrowers.

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