Alabama Real Estate Practice Exam

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Master your Alabama real estate exam with our comprehensive practice test. Tailored feedback, expert tips, and up-to-date questions to ensure your success!

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.