Disadvantages of Mortgage Insurance
Despite the fact that purchasing mortgage insurance gives you more options when purchasing property, after seeing the price tag attached to mortgage insurance quotes, many people dispute whether the insurance is worth the extra cost.
If you make a down payment of at least twenty percent when purchasing property, you will not need to purchase insurance. The cost of the insurance depends on many factors, including your income, credit, size of the loan, and how long you will need to keep insurance rates down. Some types of insurance can be rolled into the loan, but these policies accrue interest that you will have to pay. If you wait to purchase property until you can put twenty percent down, you will avoid the costs associated with the insurance.
If you decide to purchase insurance in order to buy property, remember that it is designed to protect the lender, not you. This means that if you default on your loan, your mortgage insurance will pay the lender and you will receive nothing, even though you, not the lender, paid for the insurance.
Sometimes insurance companies provide extra services to lenders. While these services appear to be free, in actuality the cost can be passed down to the borrower. Your mortgage insurance payments may include fees for extra services for your lender. If you purchase an insurance policy, be sure to go over your policy carefully so that you know exactly what you are getting for your money.
Weighing the pros and cons of different types of insurance is
important when deciding what property to buy, and when. Aside from
contemplating the benefits and drawbacks of the insurance,
calculate how much the insurance could cost in different scenarios.
Take into account how much money you might spend on rent in the
time it takes you to set aside a twenty-percent down payment to buy
a home. Think about other major expenses that can affect the amount
of your down payment and monthly mortgage payments. Also take into
account the difference in cost among different types of policies
and whether paying extra to move into your new home sooner is
possibly worth the cost of the insurance. You will likely be
satisfied with your decision if it is an informed one.
Mortgage Insurance Directory