If a borrower has a purchase price of $200,000, an appraisal amount of $200,000, and a loan amount of $190,000 with 90% LTV, what is the borrower's monthly premium if the insurance premium multiplier is 0.54%?

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for UCF REE3043 Fundamentals of Real Estate Exam 4. Discover flashcards, multiple choice questions with detailed hints and explanations. Boost your confidence and performance for success!

To determine the borrower's monthly insurance premium, we first need to calculate the annual insurance premium using the given insurance premium multiplier and the loan amount.

The loan amount given is $190,000, and the insurance premium multiplier is 0.54%. To find the annual insurance premium, we multiply the loan amount by the insurance premium multiplier:

Annual Insurance Premium = Loan Amount × Insurance Premium Multiplier Annual Insurance Premium = $190,000 × 0.0054 (0.54% expressed as a decimal) Annual Insurance Premium = $1,026

Next, to find the monthly insurance premium, we divide the annual insurance premium by 12 (the number of months in a year):

Monthly Insurance Premium = Annual Insurance Premium / 12 Monthly Insurance Premium = $1,026 / 12 Monthly Insurance Premium = $85.50

So, the correct answer is $85.50, which agrees with the calculation based on the information provided in the question. This represents the expected monthly cost for the borrower to cover the insurance component associated with their mortgage based on the loan amount and the premium multiplier.