When you are in the process of buying a home and obtaining a mortgage, be sure you understand what people are talking about when they talk about mortgage insurance.
There is frequently some confusion among homeowners about the kinds of insurance they are discussing when they are talking to their bank.
Lenders feel they have to protect themselves when a lender has a very little down payment. The concept is that the buyer does not have enough equity, or enough of his own money invested in the property to make walking away from it a less attractive idea. These small or no down payment loans worry lenders since the temptation to default is more than normal.
So the lender insists upon an insurance policy that will protect him if the borrower is not able to continue his mortgage payments. The lender is the beneficiary of this kind of mortgage insurance.
If you are concerned, as a responsible homeowner and family man, that your family will not be able to continue to afford the mortgage and live in their home if anything occurs to stop your flow of income, you may think about taking out mortgage life or disability insurance.
The main wage earner would take out a policy that would protect his family and allow them to keep the home, in case anything happens to him.
If he dies, mortgage life insurance would pay off the loan, and if he is disabled for any length of time, mortgage disability insurance will continue the mortgage payments while he is disabled. Most mortgage life insurance policies are decreasing term, which means that the residual benefit of the policy decreases over time, as the mortgage decreases in outstanding value. There is no need to continue paying the premium on a $200,000 home loan as the balance gets lower and lower with each mortgage payment.
f you want to protect your family in the case you become disabled and unable to earn your salary for a period of time, you would subscribe to mortgage disability insurance, which would pay your monthly payment for the period of your disability.
Take sure you are clear on the terminology that your lender uses when you are discussing mortgage insurance. Lenders may offer these types of life or disability policies, and even make some income from them, but it is important to understand which kind of policy they are offering to you; if you have a low down paymentloan, you may not be getting the kind of protection you think you are.
Concrete Estate Investor Insider Covert 13: Use The Prevalent Word In the English Language, Because
Topics: Mortgage, home, Real Estate, insurance