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Mortgage Insurance

May 27, 2008  |  Difficulty: Easy

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There are many companies and agencies that claim to insure your mortgage. Some companies say that they can even help you save up for your new home. Most mortgage insurance providers are in the business of helping to pay your mortgage payments if you are unable.

Most lenders offer mortgage insurance. This insurance will cover the cost of your mortgage if you or your partner in the case of disability, sickness or death. Only the persons listed on the mortgage will be covered.

Buying a mortgage insurance policy may be more affordable if purchased directly from an insurance agency. The insurance that is offered by your lender will generally be pricier and will come with little benefits. Your lender will stress the importance of getting mortgage insurance, and this is true. But it is best for you to seek out insurance from another agency to get a real bargain.

The insurance that lenders offer can be up to three times more expensive than the policies offered by other independent agencies. However, if you have to take out separate policies to cover both you and your partner it is best to see if this choice is better or worse than taking an all encompassing, single policy with your lender.

Sometimes a borrower has less desirable credit and the lender requires an insurance policy. In this case, the borrower has no choice but to accept or to not accept the offer. The policy in this case is quite different than mortgage life insurance. It will be like a private mortgage insurance that you have to pay if you don’t have an entire 25% of the total mortgage as a down payment. This mortgage will allow you to purchase the home, but it really does not help you in any way. Really, it’s just an added cost.

Once you have built up your credit, renegotiate with your lender to get rid of this insurance, and seek a policy that is created to protect you.

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