1. Private mortgage insurance is a way of getting a loan that is greater than an 80 percent loan-to-value ratio. Companies like Mortgage Guarantee Insurance Corporation (www.mgic.com) offer such loans. Paying for the insurance to get the additional loan (more than 80%) is analogous to paying a higher interest rate to get a higher loan-to-value ratio as discussed in the chapter. Go to the MGIC website and find out more about how private mortgage insurance works and the typical cost. How would you determine the incremental cost of a loan with private mortgage insurance versus one that did not require insurance?