Do You Need Mortgage Insurance for a Home Loan?
Mortgage insurance ensures that you have coverage for times you are unable to meet your mortgage payment or are beginning to default. There are different types of this insurance that will cover specific events, such as default insurance, life insurance, critical illness and disability insurance to protect yourself and your lender.
The requirements for mortgage insurance can differ depending upon location and lender rules. Most places with a mortgage over $1 million or with a down payment that is below a set threshold will require that mortgage insurance be maintained.
Mortgage default insurance protects the lender from default. In the event that a mortgage goes unpaid, or payments are short the loan will go into default. Once defaulted the default insurance will cover the difference between what the home is sold for upon repossession and how much is left owing on the mortgage. The premiums are included into the calculation for the mortgage payments.
Life insurance for a mortgage, also called mortgage protection insurance, will cover the remainder of the mortgage should the buyer pass. This removes the weight of the loan off of the remaining family and allows them to remain in their home. Often a requirement, this type of mortgage insurance is as important as disability insurance.
Speak to a Broker
The best way to ensure that you have all of the right insurance and coverage, as well as the best rates, is to speak to a mortgage broker. Find a broker that is not affiliated with any insurance providers and that works separately from the lenders to ensure the best options and that they are looking out for your best interests.
Mortgage brokers at Grapevine Mortgages are able to find the best lender for your needs and ensure that you are getting the best interest rates available. A good broker will also determine the insurance coverage that you need for your mortgage and help arrange the insurance along with your mortgage. Many of the premiums are included in the mortgage and can be arranged at the same time.
Home purchases are the biggest commitment that most people will make and will often be the largest loans for individuals. It is important to ensure that all assets are protected and carrying mortgage insurance will encourage lenders to offer the mortgage and more favorable rates, while adding mortgage protection insurance helps protect the home and family if the homeowner should pass away. Mortgage default insurance helps to lower the burden on repayments if a loan is defaulted and results in repossession and sale for the home.
To ensure that all of the insurance and other needs are provided for it is key to have a mortgage broker that is independent from the lenders and the insurance providers. The broker will work for the buyer and help broker the best deals, select the best insurance plans, and organize the top interest rates.