Basic Things That You Need To Know About Mortgage Insurance Protection
A lot of people do not get mortgage insurance protection thinking that this type of insurance policy is just an additional burden for them. This is rather unfortunate because getting mortgage insurance protection actually has more advantages than disadvantages. No, mortgage insurance protection does not only protect the lender. This type of insurance also benefits the borrower as well. To help you understand the importance of getting mortgage insurance protection, read on.
When To Get Mortgage Insurance Protection
Not all people are required by law to get mortgage insurance protection. For some people who can afford to pay large down payments of the home that they want to buy, this type of insurance policy may not be necessary. However, for people who are on a tight budget and would like to pay a lower down payment, this type of insurance policy is a must. Mortgage insurance protection is actually required for loan amounts that exceed 80% of the value of the home that you want to buy. If you are thinking of buying a home and you cannot afford to pay the 20% down payment, getting mortgage insurance protection is your ticket to getting that new home. This means that you can move into your new home by just paying a small fraction of the standard down payment amount.
The amount of insurance premiums will be computed based on your outstanding balance. For instance, if you pay 15 percent down payment on your home, the 85 percent outstanding balance on the price of the property shall be the basis for computing your insurance premiums. Yes, you need to shell out an additional amount of money for the mortgage insurance premiums but considering that you can get your new home for a lesser down payment; the extra amount of money that you pay for your insurance premiums is well worth it. Just consider the amount of money that you pay for your insurance premiums as part of your purchase price.
Is It Necessary For You To Pay Your Insurance Premiums In Advance?
Although it would be nice to pay your insurance premiums in advance, you are not required to do this. Most insurance companies will allow you to add the cost of your insurance premiums on your monthly amortization. To get some ideas as to how much insurance premiums you will need to pay monthly, ask your creditor and your insurance company to give you a breakdown of the amounts that you will need to pay monthly.
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