| Home Mortgage Insurance |
Home mortgage insurance covers lenders against losses resulting from defaults on home loans. Home lenders may require mortgage insurance if a home buyer makes a down payment of less than 20 percent of the cost of the home.
Home buyers can also voluntarily buy insurance that will repay the mortgage completely, if they die or are disabled. This relieves the family of the home owner from the burden of having to repay the mortgage.
You can also buy mortgage unemployment insurance, which may provide up to 6 monthly mortgage payments in a 12-month period, if you have been unemployed for more than 30 days.
Home loan lenders require mortgage insurance because studies have shown that borrowers who put down less than 20 percent are more likely to default.
If a borrower is unable to keep up with the
home mortgage payments, the loan lender can foreclose on the property, and file a claim with the insurer to recover some or all of the losses.
If you cannot afford to make a down payment of 20 percent of the value of the home, mortgage loan lenders may ask you to buy private mortgage insurance (PMI), which is sold by private insurers.
Normally, you can request that the PMI be cancelled once you have reached about 20 percent equity. This may not be possible if you have not been making your payments on time, or if you are considered to be a high-risk borrower.
You may be able to get a mortgage with a much smaller down payment, if government assisted programs like those of the FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services are available.
Ask the lenders about the down payment requirements and find out if any special programs are available. Check to see how much you will have to pay towards mortgage insurance every month. Find out about how long you will have to continue with the mortgage insurance.
You can get a better deal if you shop around, compare offers, and make lenders compete for your business. Use an online
mortgage calculator to assess your options. Check the credentials and reputation of the lenders and read the fine print before you sign up.
We can help you to get free, no-obligations mortgage quotes from pre-screened lenders in your area, quickly and easily. There are no costs or commitments involved at all and we will not reveal your contact information to anyone without your permission.
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