46. A buyer wants a fixed-rate, conventional loan and puts 20% down. The buyer would
Answer: D
The buyer would not need private mortgage insurance on the loan.
Since the buyer is putting 20% down on a fixed-rate conventional loan, they are not required to pay for private mortgage insurance (PMI). PMI is typically mandated for loans where the down payment is less than 20%.
A) need a mortgage insurance premium on the loan
This option is incorrect because a mortgage insurance premium is not necessary when the buyer puts down 20%. In fact, PMI is specifically designed to protect lenders when borrowers make smaller down payments.
B) need a life insurance policy equivalent to the amount of the loan
This option is incorrect as well. While having life insurance can be beneficial for financial security, it is not a requirement for obtaining a mortgage loan, regardless of the amount.
C) not need to pay for a title policy
This option is misleading. While the buyer may not need to pay for private mortgage insurance, they may still need to obtain a title policy, which protects against losses from defects in the title. Therefore, this option does not accurately reflect the requirements related to the mortgage.
D) not need private mortgage insurance on the loan
This option is correct. A down payment of 20% or more typically exempts the buyer from needing to pay for private mortgage insurance, making this a favorable situation for the buyer.
Conclusion
The correct answer is D because a 20% down payment on a fixed-rate conventional loan allows the buyer to avoid the additional cost of private mortgage insurance. Options A, B, and C are incorrect because they either misrepresent insurance requirements or suggest unnecessary policies. Thus, option D stands as the definitive answer regarding the financial implications of the specified down payment.