Private Mortgage Insurance
Private mortgage insurance is actually designed to protect the mortgage lenders against the financial loss that may occur due to non-payment of the mortgage loans. If you opt for private mortgage insurance, then no protection is offered to you, on the contrary your mortgage lender enjoys the benefit. If you buy a private mortgage insurance policy, then if for some reason you fail to repay the mortgage loan, the insurance company pays the loan amount to the loan provider.
But in one way the mortgage protection insurance helps the borrower. By opting for a private mortgage insurance policy, you can get a mortgage loan with very low down payment. The private mortgage insurance lowers the level of default risk associated with a mortgage loan. So, with the help of private mortgage insurance, you may become able to receive a mortgage loan, which was otherwise impossible to get. So, in a way, mortgage protection insurance provides you an easy access to homeownership.
To know more about private mortgage insurance just visit this insurance site.
Important Facts
- If you opt for private mortgage insurance, then you can get a home mortgage loan by making a down payment as low as less than 20% of your home value. This means private mortgage insurance can help you in getting a loan amount, more than 80% of your home value.
- The cost of private mortgage insurance depends on the term of your mortgage loan and also on the level of the down payment that you make for getting the loan. Generally, your individual credit rating does not affect the cost of your private mortgage insurance policy.
- The premiums that you pay for private mortgage insurance do not the advantage of tax deduction.
- You are entitled to cancel your private mortgage insurance. But there are some conditions. You have to pay 80% of the price at which you originally purchased the home or 80% of the appraised value of your home at the time taking the mortgage loan, whichever is less. You are also required to have a good payment history. Moreover, before canceling the private mortgage insurance the insurer will check whether you have taken a second mortgage loan against your home.
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