Whether you are a first-time home buyer or you already have a home, it’s always good to brush up on mortgage insurance to make sure you’re covered in the way that you need to be. Depending on your situation, you may not qualify for a particular type of mortgage insurance and need to go with another. But, don’t worry, we are going to go through that.
In this article, we are going to be discussing the different types of mortgage insurance and which ones apply to which situations.
Mortgage Default Insurance
This type of insurance is for people who have less than a 20% down payment for the home that they’re looking to buy. This means that you needs to purchase mortgage default insurance as it covers the lender should you not be able to make your mortgage payments. The government requires people in this situation to purchase this type of insurance. This particular type of insurance is for the benefit of the lender as it only protects them.
At the end of the day, this is the kind of insurance that would protect you and your family should something happen to one of you. Basically, you want to make sure that your mortgage insurance will cover the cost of your mortgage should there be a fatality to one of the mortgage holders. Keep in mind that this is not mandatory to have when buying a home, but it’s a form of protection for you and your family.
This is another option when you’re looking at protection should something happen to one of the mortgage holders. You do not want to be leaving your family with a mortgage payment that perhaps they cannot afford on their own. Life insurance is a great way to insure your family would be taken care of. Just make sure that your life insurance amount is sufficient for the amount you currently owe against your mortgage. Keep in mind that life insurance can take some time to put into place, sometimes up to three months, and a full medical exam needs to be performed in order to determine the state of your health.
This is insurance that will protect you while you are still alive. If you are off on long-term disability and can no longer work you can make a claim and have 50-100% of your monthly mortgage and property tax payment paid for. This is until you can go back to work, or two years of you life.
The bottom line is that you not only need to think about insurance for your lender – should you have less than a 20% down payment – but you also need to think about insurance to protect you and your family.
Buying a home is almost always the biggest purchase of people’s lives, so you need to make sure you have the proper protection in place should life throw something at you that you didn’t expect.