Why is it important to have a mortgage insurance?

It is often stated that buying a house is probably the biggest financial investment people ever make. So, wouldn’t be wise to take a few moments and think about what could happen to your family in case you’re not able to pay your mortgage anymore? A sudden death, an accident or a terminal disease are just some of the most frequent reasons. How can you or your family cover your investment for unexpected situations? A mortgage insurance might just be the answer you are looking for.

Family Insurance

Although for some the idea of paying for an insurance policy might sound strange or frightening at first sight. Things are not that bad. You basically ensure your family’s peace of mind and financial stability in case you are not able to provide anymore. But, to better understand this topic. Let’s get an in-depth analysis and see why you should consider purchasing a mortgage insurance too.

Top reasons you need a mortgage insurance!

As the list of reasons you should get a mortgage insurance can become endless. We have pointed out the most important ones for you to consider. Any of these situations might happen, so what then? Choose to be smart and stay one step in front of unexpected situations. Choose to be covered by a suitable insurance policy. Here are the top 3 most important reasons you should consider buying a mortgage insurance as soon as possible!

To keep your investment secure

It’s needless to stress the responsibility that getting a bank loan really means; and even more, if we’re talking about a large loan such as the one you need to buy a property. What can happen if at a certain point in life you cannot pay your mortgage because you become disabled or even worse, you die? In short, you or your family could lose both the investment you hardly paid up to that point, but you can as well lose the property too. So, what better way to shelter your investment than to sign up for a mortgage insurance?

To keep your family financially protected

A fact is certain, we cannot predict the future. Otherwise said, no one can know for sure what tomorrow can bring for any of us. However, we do know that no matter what, the mortgage needs to be paid. So, taking this fact into account, did you know that the mortgage insurance is considered to be one of the cheapest term insurance policies out there? If not, voila – you just found out a piece of info that can safeguard your mortgage payment. Do your homework and talk to an insurance agent to find a suitable option for your own needs. Get a mortgage insurance you’re comfortable with.

To get peace of mind

As we’re witnessing more and more accidents or tragic events that happen on a daily basis, we don’t have any better option but to stay prudent and therefore prepare a plan B. Why make your family struggle in case something happens to you? With a mortgage insurance policy, you can be positive your house will be fully repaid to the bank and your family won’t stress about this issue too. What’s even more important for you to know about a private mortgage insurance – you don’t have to die to use the insurance money. How come? Well, in the majority of the policies, if you suffer an accident or you become unable to work, then the insurance will pay the rest of your mortgage.

And more…

Have you tried to apply for a life insurance, but everything seems to be too complicated for you or your application got rejected? Then, you should at least get a mortgage insurance. Here, you won’t have to pass so many in-depth medical examinations and this mortgage is specific to this cause – repay your bank loan so that you can keep your property.

BPMI vs. LPMI, what are the differences?

One of the easiest ways to make sure you’re not going to commit financial mistakes that you might regret afterward is to get informed. There have been many debates about the differences between BPMI (Borrower paid private mortgage insurance) and LPMI (Lender paid private mortgage insurance). So, let’s clear out this issue too. We promise we’ll keep it simple.

In short, here is what you need to know:

Borrower paid private mortgage insurance

Or commonly referred to as BPMI, is considered the most popular form of Private Mortgage Insurance (PMI) nowadays. Why is this so commonly preferred by a large category of home buyers? Well, this insurance helps borrowers get a mortgage even though they don’t have the required 20% down payment. Even though you might get higher payments at first, this insurance can be canceled when the balance of your loan gets to 78% of the original value of the property.

Lender paid private mortgage insurance

Or commonly referred to as LPMI, is similar to the Borrower Paid Private Mortgage Insurance, the main difference consisting in the fact that this one is paid by the lender. The costs are included in the interest rate of the mortgage. You’ll get lower monthly payments, compared to the BPMI, but the interest rate will be higher. Moreover, this one cannot be canceled until the loan is paid off.

All in all, no matter what policy you choose, make sure you fully understand it before making up your mind. Get a trustworthy insurance company to explain the terms for you, and get you the details you need. Most importantly, don’t be afraid to say out loud your worries!

Final word

When having a monthly mortgage to pay, the safest way to make sure you’ll be able to repay the bank the entire loan is to have an insurance policy. This policy is meant to cover your investment when unpredictable events take place. Do your homework and choose the policy that offers you and your family the peace of mind you need. Don’t choose to take unnecessary risks when it comes to the home that shelters your loved ones!

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