Questions to Ask Your Agent/Broker about Mortgage Insurance
- Is it required? Mortgage insurance is not required if you are making a down payment that is twenty percent or greater of the value of the property you are purchasing. If your down payment is less than twenty percent, insurance is usually required in order to obtain a loan. Sometimes there are alternatives available. For example, if your down payment is ten percent, you may be able to take out a mortgage that covers eighty percent of the value of your property and an additional loan that covers the remaining ten percent.
- Are there discounts available? Different types of insurance will incur different costs. Single and split premium types of insurance will become a part of your loan, requiring you to pay interest. Monthly and annual premium costs more up front, but does not require you to pay interest. In many but not all cases, monthly and annual premium mortgage insurance cost less overall. However, the best value for you depends on the interest rate and how soon you are able to pay off the mortgage.
- Do you have a specialty in this area? Brokers who typically deal with low down payment loans are likely to have more experience with this type of insurance than brokers who deal with larger down payment loans. Brokers who issue low down payment loans should be able to provide you with information on your options and recommend several companies for you. However, since the point of the insurance is to cover the lender, you need to assess how much you trust the broker’s advice. Pay attention to what your broker suggests, but do your own research as well.
- What is the company’s customer complaint
rate? There is debate over whether mortgage insurance
benefits the borrower or is merely a money-maker for lenders and
insurance companies. For some home buyers, mortgage insurance is a
means to purchase a home they otherwise would not be able to
purchase. Asking your broker about the company’s customer
complaint rate will help ensure you get the best advice about your
options. If the complaint rate is high, consider going with another
Mortgage Insurance Directory