Today it is hard to watch television or read the newspaper and not know that we are having a mortgage crisis. Even though most of us never plan on defaulting on a mortgage there can be many reasons this can happen. A loss of employment, sudden death of the primary provider in the family or a catastrophic injury. These are some good reasons to have mortgage insurance. This insurance provides a sense of security to the lender to counter the risk that the homeowner may default on the mortgage.
Mortgage insurance is a partnership between your lender and the insurance company in which they both share the overall risk. If you as the borrower can not pay back the loan then both companies have some form of protection. As you search for this type of insurance you must be clear and understand the difference between mortgage insurance and homeowners life insurance. Each one of these has a different and specific purpose.
Mortgage life insurance protects the borrower and his or hers family not the lender or the insurance company. In the event of an untimely death of the primary policy holder the family know has the funds to pay off the loan freeing them from the financial burden this can cause.
Homeowners mortgage is also beneficial to the home buyer because the insurance company assumes the risk. This makes it much easier for the borrower to get a loan now that the homeowners insurance company is assuming the risk and it may even allow you to put down a smaller down payment.
If you are the owner of multiple homes mortgage insurance will allow you to provide less money for down payments. You may be able to qualify for certain tax breaks since you can deduct the amount of interest rate that you pay to the lender when it is tax time.
Some feel that it can be a negative to have mortgage insurance because you will have to pay more costly insurance premiums and annuals. Only you as the buyer can weigh the pros and cons of mortgage insurance and see if it the correct move for you. I feel in the end that the benefits out weigh the cost and it could be the right decision for you.