[amp_mcq option1=”To bargain for cheaper mortgage rates from loan provider” option2=”To continuously protect the value of the mortgaged property” option3=”To escape court action of attachment in case of default or indebtedness” option4=”To act as a collateral for ensuring financial protection for home loan borrowers” correct=”option1″]
The correct answer is: To act as a collateral for ensuring financial protection for home loan borrowers.
An MRI, or mortgage insurance, is a type of insurance that protects lenders in the event that a borrower defaults on their mortgage. This type of insurance is typically required for borrowers with a down payment of less than 20% of the purchase price of the home.
There are two main types of mortgage insurance: private mortgage insurance (PMI) and government-backed mortgage insurance (FHA). PMI is typically required for borrowers with a down payment of less than 20% of the purchase price of the home. FHA is a government-backed mortgage insurance program that is available to borrowers with a down payment of as little as 3.5%.
Mortgage insurance can provide peace of mind for both borrowers and lenders. For borrowers, it can help them qualify for a mortgage with a lower down payment. For lenders, it can protect them from losses in the event of a default.
Here is a brief explanation of each option:
- Option A: To bargain for cheaper mortgage rates from loan provider. This is not an essential feature of an MRI. Mortgage rates are determined by a number of factors, including the borrower’s credit score, debt-to-income ratio, and the type of mortgage. MRI does not have a direct impact on mortgage rates.
- Option B: To continuously protect the value of the mortgaged property. This is not an essential feature of an MRI. The value of a mortgaged property is determined by a number of factors, including the location of the property, the condition of the property, and the market conditions. MRI does not have a direct impact on the value of a mortgaged property.
- Option C: To escape court action of attachment in case of default or indebtedness. This is not an essential feature of an MRI. If a borrower defaults on their mortgage, the lender may take legal action to foreclose on the property. MRI does not protect borrowers from foreclosure.
- Option D: To act as a collateral for ensuring financial protection for home loan borrowers. This is an essential feature of an MRI. MRI acts as a form of collateral for lenders, which helps to protect them in the event of a default.