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6 Reasons Why Mortgage Insurance is a Smart Investment marketbusinessnews.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from marketbusinessnews.com Daily Mail and Mail on Sunday newspapers.
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Posted:
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February 12, 2021 5:58 AM
The average down payment for first-time homebuyers was 6% in 2019, according to the National Association of Realtors. Among all homebuyers it was 12%. If you’re like the average homebuyer and plan to put down less than 20%, you should plan for an extra expense mortgage insurance.
With all of the other costs involved in buying a home, you’ll want to understand when mortgage insurance is required, how long you have to have it, and how much it will cost.
What is Mortgage Insurance?
If you can’t pay your mortgage, mortgage insurance protects your lender from financial loss. It doesn’t provide any coverage for your home; it only protects your mortgage lender. If you put less than 20% down on a home purchase, the lender considers your mortgage to have a higher risk. Therefore, mortgage insurance protects their investment if you stop making loan payments.