You May Or May Not Need Mortgage Insurance


If you are buying a home and not forking out a down payment of at least 20%, the chances are you will be asked to pay for the Private Mortgage Insurance (PMI). If you are a homeowner that was required to purchase private mortgage Insurance (PMI) as a condition of approval on your loan, you are not required to carry this insurance forever.

Many people find themselves in a situation where they simply do not have the money to pay more than 20 percent down payment of their mortgage. If you want to pay less than 20% down, the best way to get around mortgage insurance is to finance your purchases with two loans, a first and a second mortgage.

Under the provisions of the HPA, your lender must automatically terminate your PMI when you’ve paid down your mortgage to 78% of the original purchase price or the appraised value of your home when you bought it, whichever is less, as long as your mortgage payments are current when you reach 78%.

Despite what the press says, it doesn’t have to be expensive to take out this kind of insurance, and nor do you have to take out a policy with your current mortgage lender. A mortgage life insurance is easy to have; all you need to do is keep up your monthly payments for the term of your plan. However, mortgage insurance is an extremely important insurance to have – in fact, it can be the difference between keeping a roof over your head and ending up having your home repossessed.

In a nutshell, in the event of you or your partner dying, mortgage life insurance can mean that the difference between having your home repossessed – a frightening thought. Most companies that provide mortgage life insurance plans have a website where you can calculate the cost depending on the figures you enter. Private mortgage insurance can be very hard on the pocket because the PMI companies can charge up to hundreds of dollars depending on your credit.

While the basic principle of mortgage life insurance is a sound one, there may be better ways to spend your insurance dollars. On the other hand, if there are no distinguishing reasons for going with a mortgage insurance policy, some mortgage companies offer a complimentary mortgage insurance policy along with the mortgage.

Another solution is the Lender-Paid Mortgage Insurance (LPMI) in which the lender, and not the borrower, “pays upfront” the cost of the insurance but the total amount is rolled into the mortgage and amortized over the whole life of the loan. Since mortgage insurance secures the lenders against defaulters, a home purchase with an insured mortgage and low down payment is no longer viewed as a riskier business by the lenders.

A piggyback mortgage is also known as an 80-10-10 loan because it involves a first mortgage for 80% of the purchase generally offered at a lower rate, a second trust loan (second mortgage) for 10% at a slightly higher rate and the remaining 10% as a down payment. The second mortgage is typically at a higher interest rate than the first, but not always.

View some recommended source for insurance quotes there are simple site that offer low rate insurance quotes of all types. Mortgage life insurance policies are policies where people can secure the condition or future of their health giving their assets as a mortgage to a particular bank or financial company. Mortgage insurance ensures the lender is covered in cases in which the borrower can no longer pay the loan and defaults on it.

Sometimes it may happen that people find it difficult to pay premiums at the rates put by the companies. Mortgage Insurance provides detailed information on Mortgage Insurance, Mortgage Insurance Rates and more.


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