Mortgage Insurance—Does It Really Work?

Mortgage insurance or mortgage guarantee is an insurance policy that insures lenders against loss when a borrower fails to pay their mortgage. This is the type of insurance that everybody complains about. When a borrower defaults to pay and the lender takes title to the property, the mortgage insurer either reduces or eliminates the loss to the lender. Therefore, this problem is shared the borrower.

Knowing How Mortgage Insurance Really Works

Basically, it is the borrower who will be paying for this mortgage insurance. With this, he/she should be aware that a monthly amount may be included in the payment of the property which is given to the lender despite the many premiums to choose from. If you compare mortgage insurance over term life insurance, it is always up to you which is better for it depending on your situation. However, both are different types of insurance products but share some common features. To better understand these two, please watch this short video.

Comprehensive Difference between Mortgage Insurance and Term Life Insurance

Although mortgage insurance shares a lot of benefits, it still has some disadvantages. Once you failed to file a claim by the time you found out that you can’t keep up with the necessary payments, you will eventually lose your dream home. Therefore, it is important for your to keep up a good communication towards you lender in order for easy access especially when this point of time comes. Another possible risk is that you might end up with dented credit when your insurance company defaults on making payments on time.

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