Which of the following premium payment plans are generally offered by mortgage guaranty insurers?

Question

Options

• Amonthly premiums
• Bannual premiums
• Csingle premium
• DAll of the above

• A
  5% (2)
• B
  7% (3)
• C
  16% (7)
• D
  73% (32)

Explanation

Option D is correct because mortgage guaranty insurers (also called private mortgage insurance, or PMI, providers) typically offer all three premium payment structures to accommodate different borrower needs and lender requirements. Monthly premiums spread the cost over time and are commonly added to the borrower's monthly mortgage payment, making them the most familiar option. Annual premiums are paid once per year, often at closing or annually thereafter, and may offer a slight discount over monthly plans. Single premiums involve a one-time upfront payment - either paid out-of-pocket at closing or financed into the loan - that covers the entire PMI obligation, eliminating ongoing monthly costs.

Since all three are legitimately offered, options A, B, and C are each only partially correct on their own, making "All of the above" the only complete answer.

Memory tip: Think "MAS" - Monthly, Annual, Single. PMI providers say "MAS" (more) yes to all three, so the answer is always "All of the above" when all three appear as choices.

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