The Risks of Mortgage Insurance

The Risks of Mortgage Insurance

You need to read this whether you are buying a new home, refinancing a loan or upgrading the house you are living in. you need to read and be sure of all the options you have before taking on any kind or mortgage insurance. You have the option of taking life, disability or unemployment mortgage insurance. Most of the companies that sell you insurance will paint a rosy picture of the benefits of any of these insurance polices and they may be true but you need to educate yourself and see the true picture, not what they want you to see.

First, there is the risk that the bank is the one being insured, not you. While you will be paying the premiums for example unemployment insurance policy, it is designed to protect the bank if you cannot pay. Does it make sense? Here we go again…you have borrowed a loan from the bank to buy your home and for reasons of unemployment, death or disability you are unable to pay. The bank is the one in risk of you not paying the loan and for this reason will require you to pay the insurance premium. This is not the best way to look for some cash for yourself as you are not the beneficiary of this cover. It is however a way of getting the bank off your back, a way of transferring the responsibility of payment to the insurance company, but it does not average that you will have any money in your hands. So, if you get unemployed and you have no other method of paying your bills, do not rely on mortgage insurance.

The older you are, the more the premiums will be. This is because younger people are less likely to be incapacitated as to be unable to pay off their mortgage premiums. This is a disadvantage if you are older, but you need to prepare for it. There is the other fact that this is not exactly the kind of mortgage insurance that will move with you from bank to bank so if you change edges you may not have this assistance. This method that if you move homes or edges, you have to reapply and risk higher lending rates and stricter payment terms. It does not transform to long-lasting life insurance for those who never need its use, and this is also a disadvantage for you.

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