Is It A Good Idea To Get Mortgage Insurance?

​Getting a new house includes purchasing homeowners insurance to cover the cost of repairs and replacement of damaged or stolen property. Mortgage protection insurance (MPI) can help protect you if you cannot make your mortgage payments on time.

Mortgage Insurance Defined
It protects the lender if you don't make your loan payments, allowing them to recover the money they insured. Lenders often offer various mortgage insurance products that suit different circumstances, so it's important to compare them all and choose the one that suits your requirements best.
  
Mortgage insurance is an extra protection offered by lenders to help borrowers pay the cost of financing their purchase. It provides you with the security of payments should you have a claim against your mortgage or if you make a late payment. 

While it is not compulsory to have mortgage insurance, some borrowers may prefer to purchase it as it protects them against a negative equity situation that may arise if they miss their loan repayments for any reason.

Types of Mortgage Insurance
Here are the kinds of mortgage insurance you can get. 

1. Split Premium
   Split premium mortgages usually have a variable interest rate; some borrowers pay part upfront and part monthly. It offers a flexible payment schedule with no long-term commitments like traditional loans.
   
   
2. Borrower-Paid Monthly
   This is the most frequent mortgage insurance policy, which you pay monthly. You typically put in a certain amount each month on your statement.
   
   
3. Lender Paid
   Your lender charges your mortgage or home equity line of credit interest at a higher rate and adds a fee to the loan. The lender gets paid, and you pay more.
   
   
4. Borrower-Paid Single Premium
   A single premium mortgage means you don’t make any payments during the first year. Instead, you make one payment upon closing and pay off the remainder of your mortgage over time with additional PMI payments.

Why Do You Need Mortgage Insurance?
Mortgage insurance protects you against losing value if your home goes into foreclosure. The amount you pay for mortgage insurance and whether you can cancel it based on how well your home's value appreciates over time depends on your lender. 

It can also protect you from financial loss if the value of your home is less than the payments on your mortgage. It covers the difference between a loan amount and your home's selling price if you want to sell before settling principal, interest, and taxes due on your mortgage. 

Conclusion
Mortgage insurance can reduce your monthly payments and make your loan more affordable. More importantly, it could protect you from financial hardship if something happens to the value of your home while you're living in it. 

At UG Insurance Brokerage Inc, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (718) 848-7777. Get your free quote today by CLICKING HERE. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover. We are more than happy to help!