Friday, November 14, 2008

What is Mortgage Insurance?

"The only thing certain about life is that nothing about it is."
The Mortgage Insurance refers to a special type of insurance policy which helps you to buy any property with a low down payment. This kind of policy guarantees to repay your mortgage loan in the event of death, or perhaps disability of the mortgagor (i.e,one who borrowed the mortgage). This ensures that your family need not worry atleast for ownership of the property in your absence.

MI provides a level of security to both the mortgagor and the mortgagee. It protects the financier from excess risk when around 80% or more of the total amount is taken as a loan.

*Private Mortgage Insurance - It is a default mortgage insurance provided by the private companies.In other words,this is to protect the lenders from loss in case of default (who has not met legal agreement).Hence another term for PMI is Lenders Mortgage Insurance or LMI.In this case, comparatively lower down payments are allowed.

*Mortgage Insurance Premium - Similar to PMI, this also provides protection for the lender in the event of non-payment,however here they are generally Government loan products.

Regardless of the type of mortgage insurance you're on, like business mortgage, rental mortgage,medicine mortgage, home mortgage or whatever, the most important aspect is to have a Mortgage Insurance.

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