Uncertainty, disability, death! Do you have any solution for any of them?
The most uncertain thing in life is life itself. In addition, if your family or dependents have financial liabilities then one must take care of unforeseen circumstances. Thanks to mortgage insurance you can protect your home from such liabilities and other uncertainties in your absence.
What is Mortgage insurance?
Mortgage insurance is purchased to insure your mortgage loan. In simple words, it is a kind of payment plan, which takes care of your family and dependents, if you die or there are other unforeseen circumstances before the loan is repaid. This mortgage is most commonly known as a Home Protection policy.
Types of Mortgage insurances:
You must have heard about a hundred types of insurance schemes, but it is one of the most specific and commonly used insurance. There are many kinds of mortgage loans too, but the most commonly used policies are mortgage life insurance and mortgage protection insurance. When there is a death or disability or any unforeseen accident, then it comes under mortgage life insurance, while mortgage protection insurance protects you if you lose your job or suffer any kind of illness or injury.
History of mortgage insurance:
Mortgage insurance began in the United States in the 1900s and the first law passed in New York in 1904. The industry grew by 1920 after the great Depression ends. In 1961, the Model law was created by the National Association of Insurance Commissioner. Finally, in 1999, itcame into effect by the name of The Homeowner Protection Act of 1998 in the United States and spread to other parts of the world over the next couple of decades.
Cost of mortgage insurance
Whenever you buy a product, you first inquire about its cost or whether it is affordable to you or not. Similar is the case of it. It is sometimes called Private Mortgage Insurance or PMI, to set it apart from Federal Housing Administrative insurance and Veterans’ Administrative Insurance, which are government programs. If the down payment on a home is less than 20% of the sale price you can obtain the mortgage loan. In it, the borrower pays the premium but the beneficiary is the lender. If the borrower stops paying the premiums, the company makes sure that the lender is paid in full.
These types of insurance companies help to serve the borrowers by making home ownership more affordable. It takes the worries and tension about liabilities and responsibilities from the process of taking out a mortgage.