Brett bought a house five years ago for $150,000. At that time he borrowed $140,000 from his bank. The house is now worth $162,000. The current value of his mortgage must be no higher than --- for him to request termination of his PMI policy.

Question

Quizplus · Accepted Answer

To determine the current value of Brett's mortgage, we need to use the 78% loan-to-value (LTV) ratio requirement for cancellation of Private Mortgage Insurance (PMI).

LTV = current mortgage balance / current house value

To cancel PMI, the LTV should be 78% or lower.

0.78 = current mortgage balance / $162,000

Current mortgage balance = 0.78 * $162,000 = $126,360

Therefore, the current value of his mortgage must be no higher than $126,360 for him to request termination of his PMI policy. Choice B is correct.

Brett Bought a House Five Years Ago for $150,000