Why Mortgage Insurance Can Actually Save You Money

Why Mortgage Insurance Can Actually Save you​ Money
Mortgage insurance provides lenders a​ form of​ financial guarantee which covers the​ lender in​ cases in​ which the​ borrower defaults on​ a​ loan .​
For those looking to​ buy a​ home,​ agreeing to​ loan terms which include mortgage insurance,​ increases the​ purchasing power of​ the​ buyer a​ great deal.
Agreeing to​ buy mortgage insurance allows individuals the​ opportunity to​ buy a​ home with a​ down payment of​ only 5%-10%,​ as​ opposed to​ the​ 20% that is​ often required when the​ lender does not have the​ guarantee of​ mortgage insurance.
Buyers typically purchase and pay for mortgage insurance in​ three different ways .​
These ways include paying in​ annuals,​ monthly premiums,​ or​ singles .​
We are going to​ take a​ closer look at​ the​ available mortgage insurance payment options below:
1.) Annuals: the​ annuals payment option allows the​ lender to​ collect the​ first year’s premium at​ closing and then all subsequent payments are made on​ a​ monthly basis.
2.) Monthly Premiums: This payment option requires the​ buyer to​ only pay for one month at​ closing and all remaining payments are then made on​ a​ monthly basis.
3.) Singles: the​ singles payment option requires the​ buyer to​ make a​ one-time single payment that is​ typically financed as​ part of​ the​ mortgage amount.
Mortgage insurance ensures the​ lender is​ covered in​ cases in​ which the​ borrower can no longer pay the​ loan and defaults on​ it .​
It is​ also a​ powerful bargaining tool for potential borrowers who are unable to​ come up with a​ large down payment .​
Offering to​ pay mortgage insurance can decrease the​ amount of​ ones’ down payment by 10% to​ 15%.
But it​ is​ important to​ note that mortgage insurance does not have to​ be paid forever .​
After a​ certain period of​ time and when certain conditions are met,​ mortgage insurance is​ no longer required to​ be carried on​ the​ mortgage.

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