I keep getting letters in the mail about it, but what's it all about?
2007-10-29 12:46:47 · 13 answers · asked by Anonymous in Business & Finance ➔ Insurance
Mortgage insurance is like a term policy. It pays out a death benefit if you die, and sometimes there is also a portion that will pay disability if you get sick for a long period of time and can't make your mortgage payment.
The face amount of the policy is the same as your mortgage, so the longer you have it, the less it pays. Still, it can be quite costly for the amount of the benefit.
It is better to just take out a term policy, or a whole life policy, and then you will always have that same benefit. Term policies are the least expensive, and they pay out, no matter how much you owe on your house, something which gives you peace of mind if you have a family to support. If you don't owe as much on your house, for instance, 10 years from now, your family will still get enough to pay off your house PLUS whatever the balance is on the policy. Much better.
2007-10-29 12:51:35 · answer #1 · answered by mia2kl2002 7 · 2⤊ 0⤋
Mortgage Insurance is a decreasing term life policy. The lower your balance on the mortgage gets, the less it pays but, your premium never decreases. You are better to talk to an agent that sells life insurance and get a term life policy.
Do not confuse this with PMI (private mortgage insurance). This (PMI) is a lender requirement. All it does is cover the bank incase you are to default on your loan. It does to protect you.
Talk to the agent that carries your home owners insurance and I am sure that he will be able to set you up with a life insurance policy that will cover you better than mortgage life or mortgage protection inusrance.
2007-10-30 10:01:18 · answer #2 · answered by timothy l 2 · 0⤊ 0⤋
No, do not buy mortgage insurance. Instead get a term life insurance so that in case anything happen to you, the death claim will help your family pay off the mortgage so your family will own the property instead of the bank.
2007-10-31 02:58:25 · answer #3 · answered by sac78930 1 · 0⤊ 0⤋
The idea of mortgage insurance is to protect both mortgagor and mortgagee. If the buyer dies, the mortgage is paid off, so the buyer's family doesn't have to worry about where to live. The lender receives its money, so is satisfied.
Many places force a person to buy mortgage insurance; other places it is optional.
Whether to get it or not depends upon all your circumstances; if you have dependents, it can be a good deal.
If you decide it is a good idea, shop around, as with everything else, there is a lot of difference in both quality and price.
2007-10-29 19:58:32 · answer #4 · answered by Nothingusefullearnedinschool 7 · 0⤊ 1⤋
what it's about is usually if you're married and you die the house will be paid off so your spouse won't have to worry about paying off the mortgage. if your single, that's a whole other story. unless you have a lot of equity (money invested in the house) not sure why you would want it
in reality it's just life insurance. they have what's called decreasing life ins. say you owe $100,000 on your mortgage and you take out decreasing life, each year that $100,000 policy will decrease by (let's just say $5,000.)
so that in twenty years the policy is worth nothing. but in the meantime the mortgage will be covered because you have to keep paying down the debt. i had a twenty year decreasing life but after about 6 years was able to convert it to whole life.(regular life ins.)
hope that helped you..
2007-10-29 19:58:49 · answer #5 · answered by adam/penny 7 · 0⤊ 0⤋
As far as to my understanding PMI or Private Mortgage Insurance is if you don't have 20% down when you buy your house then you have to pay the extra insurance and you don't want to do that if you can help it. Otherwise, if you are already in your house then I would ask your bank if they have someone there that can explain it to you. Good luck! My husband and I are still saving for a house.
2007-10-29 19:55:06 · answer #6 · answered by Anonymous · 0⤊ 1⤋
Mortage insurance, as in default, if you fail to repay the loan?(that pays the lender)
Or is it insurance to cover the mortage if you pass away?(that covers your heirs)
2007-10-29 19:54:33 · answer #7 · answered by Anonymous · 0⤊ 0⤋
It's a decreasing term life insurance policy. It's more expensive than straight term. If you're worried about paying off the mortgage if you kick off, you're better off with straight term, than decreasing term.
2007-10-29 23:09:29 · answer #8 · answered by Anonymous 7 · 0⤊ 0⤋
Insurance for your mortgage should you become unable to pay should you lose your job, or if you pass away, your mortgage becomes paid in full. I would absolutely buy it. Its very inexpensive, yet gives you peace of mind.
2007-10-29 19:50:16 · answer #9 · answered by Anonymous · 0⤊ 1⤋
Are you talking about life insurance, disability insurance or what?
2007-10-29 20:12:05 · answer #10 · answered by Anonymous · 0⤊ 0⤋