Posts Tagged ‘Mortgage Insurance’
The ABC’s of Mortgage Insurance
One of the biggest roadblocks for first time homebuyers is saving the downpayment. With the burdens of paying rent, student loans and other expenses it is not realistic to expect you can save 20% of a home's purchase price for your downpayment. What is Mortgage Loan Insurance? Mortgage Loan Insurance is just that — insurance from a trusted third party, which protects lenders against default on a mortgage loan by a homeowner. In Canada, Mortgage Loan Insurance is generally required whenever a homebuyer has less than 20% of the purchase price available as a down payment. Because the lender is protected, they are able to offer mortgage financing even if you have a smaller down payment, at a rate of interest that is comparable to the lower rates typicallyreserved for homebuyers with a larger down payment. To obtain Mortgage Loan Insurance, an insurance premium must be paid based on the total amount of the loan (the purchase price minus the down payment). This premium can be paid in a lump sum, or added to your mortgage and included in your monthly payments. The latter is normally the case. How Much Does it Cost? In general, the larger your down payment, the lower your premiums will ...
Mortgage Life Insurance – Protect Your Investment
I find it difficult to explain the benefit of mortgage insurance to my clients. Most clients do all they can to get their monthly mortgage obligations as low as possible (extended amortizations, larger down payments, haggling for the lowest rate....), which is why their immediate response to mortgage insurance is "no". I always encourage them to take some time to think about the coverage and what it would mean for their family. Let's step back and look at exactly what "Mortgage" life insurance is. Unlike term or hole life policies, mortgage insurance only covers your mortgage. In the unfortunate event you or your family needs to collect, the insurer sends a cheque directly to the lender to pay-out your mortgage in full. You do not receive any of the money and you can not elect to use that money for anything other than the mortgage. This is why I always encourage my clients to think twice before declining even if they already hav life insurance through their employer. Your mortgage is usually the largest piece of debt most people carry. Having the piece of mind knowing it will be paid in full and therefore allowing your family to spend any other ...
