What is mortgage insurance?

May 27, 2013  //  Posted by: cooldude  //  Category: Property Investments

mortgage insuranceMortgage insurance is nothing but an insurance of paying away the mortgage loan that you might have taken. It looks over your loan and makes sure that you pay the loan back. If due to some problems you are unable to pay the loan then this insurance pays that loan on behalf of you. There is a mortgage life insurance that goes along your life to ensure that if you face an untimely death then they pay your mortgage loan. Some of these loans also ensure that they help you in getting a benefit during some illness and disabilities.

These insurance have a premium that is calculated according to the value of the loan to be paid. There are many different types of mortgage insurance available in the market which is as follows.

  • Private insurance is issued when the down payment is less than 20%. Here the premium rate is 1.5% to 6% of the total loan amount.
  • Borrower paid insurance is another mortgage insurance that is taken on terms of the default in the mortgage. The premium of the insurance is paid by borrower. This insurance comes without any down payment.
  • Lender paid insurance is last mortgage insurance. In this the lender pays the premium of the insurance.

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