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Archive for the ‘Mortgage Insurance’ Category

Finding Out How Mortgage Insurance Works

Tuesday, September 15th, 2015

How do mortgage protection insurance work? When you obtain a mortgage protection insurance policy it means that your mortgage payment is insured for a term that’s agreed to in the policy. During this term provided you’ve been paying the premiums the mortgage would be payable by the insurance. Now it’s possible that you could die during the period of validity of the mortgage protection insurance policy. It’s also possible that the term of the policy has lapsed and you’ve not renewed it. In the cheapest form of mortgage term life insurance the policy will pay the benefits due on your death to the beneficiaries provided the term of the policy has not been completed or you have extended the term and provided you’ve kept the policy alive by paying the premium duly. The mortgage protection insurance rates would be the cheapest in this form of policy.

For you to obtain mortgage insurance rates it’s necessary for you to know some of the other options in mortgage insurance. In one form of mortgage insurance you have to renew the policy yearly. The mortgage insurance rates are low during the initial period. The premiums rise, as you grow older.

In yet another option of mortgage insurance policy that’s available the death benefit reduces from the mortgage term life insurance as you grow older and the mortgage also reduces. At the same time the mortgage premiums reduce and the coverage amount also drops. You may opt for this kind of policy since you could protect the mortgage of your property because the drop in death benefit is roughly the same as the decrease in the outstanding mortgage. It’s in your interest to look out for a policy that not only guarantees the mortgage term life insurance but the mortgage insurance premiums also do not change over periods starting from 5 years and going up to 30 years. However, once this guarantee period is over your premiums may go up but there’s a limit to this and that would have already been guaranteed. Finally, you should look for a policy that meets your requirements and those of your beneficiaries.

Many people complain about mortgage insurance costs and how it turns mortgage payments too expensive. Few people know what mortgage insurance is and what it protects you from. It is not that people would stop complaining if they knew but at least they would try and find a suitable insurance company providing a balanced solution in terms of coverage and price.

Since the insurance market is highly competitive it is possible to obtain both a complete coverage and an affordable price. You just need to shop around and do not go for the first offer you receive. You may want to search on your own instead of hiring a broker but always remember that it is possible to obtain high quality mortgage insurance for a reasonable price.

The Basics of Home Mortgage Insurance

Sunday, August 16th, 2015

Home mortgage insurance comes in two varieties. The first type is mortgage life insurance and the second is private mortgage insurance. Mortgage life insurance is a voluntary program that is generally purchased by people as a hedge against disability or death, to insure that their dependents can maintain the home. Private mortgage insurance is often made mandatory by lenders as part of a mortgage contract. Here are a few things to help you consider which you need or if you will be required to purchase private mortgage insurance when you buy your home.

Private Mortgage Insurance

A borrower purchases private mortgage insurance to compensate for a low or non-existent down payment on a home. This helps assure against a quick foreclosure situation, which can cost the lender a lot of money. This insurance will cover the cost of closing and ongoing monthly payments. Occasionally a lender will provide the insurance as part of a deal, but more often than not the cost will be placed solely on the borrower.

The biggest home lenders, Freddie Mac and Fannie Mae, have established new guidelines when it comes to insurance, as a result of their near collapse. These days a down payment of up to 25% will no longer bring borrowers a lower interest rate. In light of recent experiences, these lenders now consider such borrowers just as risky as those who provide a lower down payment and take out mortgage insurance.

Currently, once a home’s loan to value equals out, borrowers are entitled by law to cancel their mortgage insurance. That is when the amount of the outstanding loan falls below 80% of the home’s appraised value. New borrowers will likely not be allowed to cancel the insurance until the loan to value falls to 50%.

Mortgage Life Insurance

Mortgage life insurance is purchased to insure that a home is paid off in the event that the borrower dies or can no longer work. This is often done to assure that survivors can keep the property without being burdened by mortgage payments. Whether or not this type of insurance makes sense in your particular case depends on factors such as age, dependents health risks and the amount owed on the home. Many people find that it’s more economical to purchase a conventional life insurance policy, part of which can be used to pay off the outstanding debt on the home. This type of payment allows the dependents to receive a lump sum payment that can be invested and earn money while the mortgage continues to be paid. If a homebuyer is unable to qualify for a traditional life insurance policy due to ill health, then a mortgage policy might be the only option. There are usually fewer health related restrictions on such policies, making them accessible to a greater number of people.