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MORTGAGE INSURANCE:
Protection Coverage:
It is important to note that private mortgage insurance does not protect you but your mortgage lender from potential mortgage loss. Mortgage insurance protects the mortgage lender against a failure to pay and in the case of default, the mortgage lender assumes the property.
Stretching Your Dollar:
Mortgage insurance is great for new homeowners as it stretches their mortgage dollars. Mortgage down payments for new home owners are usually smaller and as such mortgage insurance provides additional confidence for lenders to be more facilitating. Mortgage lenders usually require borrowers to pay at least 20% if they do not have mortgage insurance. Once mortgage insurance is acquired, mortgage brokers may reduce the required down to as little as 5%! As a result, borrowers are able to purchase more expensive, lucrative homes.
Mortgage Insurance Benefits:
For those who have had homes already in the past, mortgage insurance has great tax benefits as they can claim additional deductible interest and the money they would have other used in their first mortgage down payment may now be used to put towards other expenses or investments.
Insurance Cancellation an Option with Increased Equity:
To save yourself some money, ask your mortgage lender about their policies on private mortgage insurance. If you are a low risk borrower, if your mortgage payments are up to date, if you have put at least 20% down towards mortgage principal balance and depending on the value of your home you may be able to cancel your private mortgage insurance with the mortgage dealer and save money! Federal law does not require mortgage lenders or mortgage brokers to provide this mortgage insurance incentive, but some may have it as a benefit for mortgage their mortgage clients.
Plans:
Mortgage insurance plans such as annual mortgage insurance plans, monthly premium mortgage insurance plans or single mortgage insurance plans are examples of packages available to the informed mortgage borrower/investor.
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