Mortgage insurance is a service that protects the lending company from excessive financial losses should you not be able to keep up with your payments. The mortgage insurance amount is usually built into the monthly payment made to the lending company.
Home > Mortgage Insurance
What is mortgage insurance?
Mortgage insurance is a service that protects the lending company from excessive financial losses should you not be able to keep up with your payments. The mortgage insurance amount is usually built into the monthly payment made to the lending company. This insurance amount is pocketed by the lending company to minimize financial losses in the event of a default by the borrower in paying back the loan.
When will mortgage insurance apply?
The expected down payment or deposit required when you purchase a house is 20%. This however, puts a lot of people in a touch position. Lets say you want to purchase a house for $250 000. Do you have $50 000 in cash laying around? Most prospective home owners don’t.
Thus mortgage insurance is a service or product that allows people to purchase a house with as little as a 5% down payment. This insurance is paid to the lender and is intended to minimize financial losses if you’re not able to keep up with your payments.
If however you’re in a position to put down a 20% or more down payment on your property, then mortgage insurance would not apply. Find out more about getting a mortgage loan here.