How does mortgage insurance work?
Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.
Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can’t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.
Private mortgage insurance allows the mortgage insurer to share the risk of foreclosure with the lender for a premium, which is paid by the borrower. If a borrower stops making mortgage payments, the lender uses private mortgage insurance to help cover the legal and other expenses involved. What does mortgage insurance do for me? Private mortgage insurance has a wide range of benefits for many different borrowers. • First time buyers can use private mortgage insurance to overcome the largest obstacle to home ownership: coming up with a traditional 20 percent down payment. With private mortgage insurance, first time buyers can buy a house and start building equity years sooner. It also eliminates the risk that the home will appreciate out of reach while the buyer is trying to save for a traditional 20 percent down payment. • Trade up buyers can use mortgage insurance to consider a wider range of homes. If you have $15,000 in savings or equity in your current home, you can make a 20 perc
