Do you know what mortgage insurance is?
Many people confuse mortgage insurance with mortgage life insurance, mortgage disability insurance, or even homeowners insurance. These are all very different types of insurance - no wonder there is such confusion! Mortgage insurance is generally required when the down payment on a home is less than 20%, and it is designed to protect the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and this can mean a higher monthly mortgage insurance premium. Depending on the specifics of your information, there are ways in which mortgage insurance can sometimes be avoided at the time of purchase, or dropped altogether at some point in the future. Many lenders now offer a single loan that doesn’t require Mortgage Insurance. These generally have a slightly higher rate.
If you have to choose, which one is best for you?

Lets look at one home purchase with three scenarios

$200,000 home
$180,000 loan (with $20,000 down)

Scenario A
One loan WITH mortgage insurance
Payments of $1,320.00 plus mortgage insurance payments of around $80.00 per month for a total of $1,400 per month

Scenario B
One loan WITHOUT mortgage insurance (8

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If you are currently pending a mortgage, you will need life insurance to help prepare you down the road when illness or death comes your way. Mortgage and Life Insurance go hand in hand, and many companies will accept most applications. Some companies may review your information and take longer to decide, but if you have a mortgage, pending the company may offer you a measure of coverage free for a short time. The Accidental Death Coverage policies are often giving to mortgage borrowers waiting for quotes on life insurance. Thus, if you have mortgage you shouldn’t worry because you will have some degree of temporary coverage.

Life insurance is not an ‘investment value,’ thus are you only paying premiums on the insurance and the rates of the coverage itself? When you take out life insurance to protect your mortgage you should be wise to consider a few additional options, since life insurance and mortgage coverage on the policies could be steep. Few insurance companies offer better rates than others do, but for the most part the companies’ are considering that they are paying mortgage and death if the policyholder dies, thus they want to money to be there if this does occur.

Homeowner should also consider that their home is an investment and valuable asset. Thus, when you are considering life insurance one of the top questions should be how much coverage would I need? The answer lies between mortgage payment and expectancy of life. Therefore, you want a policy that will cover you for the term of life and for the term of your mortgage payments.

If you are applying for life insurance to cover mortgage, then you may want to consider various other forms of protection to get the most out of your insurance. Many insurance companies’ offer life insurance may forget to inform customers about Terminal Ill and Critical Illness coverage plans, thus if they do forget make sure you ask the company if they offer the policies. Few companies’ incorporate the policies in the life plans naturally at no additional charges; however, other companies’ charge additional rates on the coverage. The Critical Ill plan will also coverage mortgage, as well as cover ‘20′ illnesses, including dismembered limbs, heart attack, strokes, blindness, dementia, and so forth. This is a good policy because life insurance is not going to cover terminal illness for the life of the policy, nor will it provide you a source of relief if you live longer than a year. Thus, having the right insurance coverage can protect and your family.

Life insurance is a demand. If you don’t have it and your family is obligated to pay for your funeral expenses, then most families are often out of luck. Failure to take out life insurance is not only causing stress to your immediate family, but other families since daughters and sons do marry. Therefore, you are extending the stress to other families when you fail to seek out life insurance. Furthermore, if you own a home you are expecting someone else in the family to payoff the home if you should die, without insurance coverage. Thus, if the family member doesn’t have money then the home is put on the market for sell. As you can see life insurance is a big decision, however, it is a small decision if you think ahead and consider your loved ones.

Furthermore, if you have an Interest Only Mortgage Loan then be ware that you will most likely pay higher premiums. The loans are setup to offer homebuyers the option to choose the amount of interest they wish to pay over a set time, thus the owner is paying interest only and the capital will not kick in until the interest only term has ended. Therefore, you are not paying nothing for your home at this time and when you take out life insurance coverage on an interest only mortgage you will need ‘fixed and constant’ coverage, since the capital will be costly. Thus, the insurance companies often apply life insurance to capital mortgages only. Finally, life insurance polices offer great rates and premiums, thus it is wise to go online and get a quote.

Authored by Michael Bens. For more great information about all forms of insurance visit our free online insurance publication the Gabae Insurance Source to find the information you’re looking for!

Also you can check out Gabae Insurance Articles to find the articles’ you’re looking for!

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Mortgage insurance provides lenders a form of financial guarantee which protects the lender in cases in which the borrower defaults on a loan. For those looking to buy a home, agreeing to loan terms which include mortgage insurance, increases the purchasing power of the buyer a great deal. Agreeing to buy mortgage insurance allows individuals the opportunity to buy a home with a down payment of only 5%-10%, as opposed to the 20% that is often required when the lender does not have the guarantee of mortgage insurance.

Buyers typically purchase and pay for mortgage insurance in three different ways. These ways include paying in annuals, monthly premiums, or singles. We are going to take a closer look at the available mortgage insurance payment options below:

1.) Annuals: The annuals payment option allows the lender to collect the first year’s premium at closing and then all subsequent payments are made on a monthly basis.

2.) Monthly Premiums: This payment option requires the buyer to only pay for one month at closing and all remaining payments are then made on a monthly basis.

3.) Singles: The singles payment option requires the buyer to make a one-time single payment that is typically financed as part of the mortgage amount.

Mortgage insurance ensures the lender is covered in cases in which the borrower can no longer pay the loan and defaults on it. It is also a powerful bargaining tool for potential borrowers who are unable to come up with a large down payment. Offering to pay mortgage insurance can decrease the amount of ones’ down payment by 10% to 15%. But it is important to note that mortgage insurance does not have to be paid forever. After a certain period of time and when certain conditions are met, mortgage insurance is no longer required to be carried on the mortgage.

For more information on better Mortgages as well as great Mortgage Broker tips, tricks, and techniques and money-saving info visit www.lenoxnationalmortgage.com

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