Benefits of Mortgage Insurance
Since mortgage insurance is not required when you purchase property with a down payment of twenty percent or more of the property’s value, and because quotes can seem so high, you may wonder if there are benefits are to buying a home with a low down payment and paying for insurance.
Mortgage insurance likely allows you to purchase a home sooner than if you had to wait until you saved a twenty-percent down payment. It may appear more financially feasible to skip buying mortgage insurance and wait to purchase property until you can save twenty percent. However, the sooner you purchase a home, the sooner you can stop paying rent. Your mortgage payments will enable you to gain equity in your property rather than paying rent to someone else, perhaps making it worth it to spend money on insurance and purchase a home sooner.
Even if you can afford to make a twenty-percent down payment on a property, this type of insurance allows you the option to make a smaller down payment and divert funds elsewhere. Whether this is financially reasonable depends on your particular financial means and goals. You may have other investments that you would like to make, or you may be paying for a child’s education, for example. Mortgage insurance provides more flexibility on how to best spend your money.
Having the option of making a down payment that is under twenty percent also may allow more options on which property you buy. The amount you have set aside for a twenty-percent down payment could be ten or fifteen percent on a larger or otherwise more desirable property. If you are purchasing insurance with the intent of buying a more expensive property, make sure you can afford a more expensive mortgage.
Essentially, when you purchase mortgage insurance you are
purchasing a tool to help you buy a property faster. This means you
can enjoy your property for a longer period of time and have you
more leeway on how to use your finances.
Mortgage Insurance Directory