Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What percentage of the loan is the mortgage insurance premium (PMI)?

1.00%
2.25%
3.50%
5.00%

The correct answer is: 2.25%

Mortgage insurance premium (PMI) is an additional fee charged by lenders to borrowers who do not make a down payment of at least 20% on their home purchase. PMI is typically paid monthly and provides protection for the lender in case the borrower defaults on the loan. The percentage of the loan that is charged for PMI can vary, but generally ranges from 0.5% to 2.25%. Option B is the most accurate as it falls within this range. Options A, C, and D are incorrect as they do not fall within the typical range for PMI percentages and are therefore unlikely to be the correct answer.