Rebecca Richardson - Mortgage Consultant
What is Mortgage Insurance?
what is mortgage insurance? And why do I need it? Well, mortgage insurance is required on some loan types, depending on the type of loan, and then also your down payment.
Mortgage insurance protects the lender in case of default, a foreclosure on the mortgage. But why should you care about what the lenders risk is? Two reasons. One is that you want to know if your loan type requires it. The other is to think about maybe it's a way instead of an extra expense as a part of your mortgage payment. Maybe it's a way to leverage money. So take conventional loans. For example, if you have less than 20% down, then you will have mortgage insurance.
Mortgage insurance can be paid monthly, or it can be paid as a one time charge. It can be wrapped into a loan. There are a lot of different options that we can go through to find the right option for you. But let's use the example. In order to avoid mortgage insurance, you take longer, maybe two to three years to save up for 20% down payment, which is great because you do save the money that you don't have to pay on mortgage insurance. But you do potentially miss out on market appreciation. Say the home that you wanted, maybe two-three years ago now costs more, maybe interest rates have changed. Mortgage insurance allows you to put less down, keep money aside, keep saving money for other purposes that you have, other financial goals while allowing you to go ahead and get in your home. Enjoy homeownership, start building wealth through homeownership and stop paying rent to somebody else. Start paying yourself and start building your own portfolio of owning a home.
I would love to discuss mortgage insurance with you. It might not sound exciting, but it is a big part of the mortgage strategy that's right for you. We can find an option that helps to serve you best.