mortgage insurance
Lenders Mortgage Insurance ( LMI ), also known as Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Typical rates are $55/mo. per $100,000 financed, or as high as $1,500/yr. for a typical $200,000 loan.
Bird lady
asked:
"I was looking into buying mortgage insurance to cover me in case something happens. I found out this existed when someone I know died very suddenly. I went to the bank where my mortgage is and they told me they only offer it on new loans( my mortgage is 2 years old ). I was not offered this protectionwhen I applied for this mortgage ( actually it was a refinance of my original mortgage ) as I applied through a mortgage company.I was told the best thing to do now was take out a life insurance policy, which I already have, but that dosent cover my husband or myself if we lose our job or become disabled.Does anyone know where I could look into this or is it even worth it? The insurance company that carries my house and auto insurance does not offer mortgage insurance.Any help would be greatly appreciated! Thank You"
Question posted courtesy of:
mohan r replied:
"Approach any insurance company to know more about it"
mbrcatz17 replied:
"Mortgage insurance is also called decreasing term. It's for the remainder of the mortgage, if you die, and only pays the payoff. It costs MORE than regular term. So, you're BETTER off if you buy a level term policy - it's cheaper, and it DOESN'T decrease each year.There's ALSO disability coverage. It's a different policy, and depending on your ages/health, it can be pretty expensive. Unemployment is NOT a private coverage in the us, you can ONLY get it through your state unemployment office.Talk to your agent that does house and auto - ask him if he sells level term coverage, and/or disability coverage. If he doesn't, ask him for a LOCAL referral. IF you're with a direct writer, ask a neighbor or friend who their local agent is. I really really strongly recommend dealing with a local agent. If you can't find one, these guys are pretty good, and licensed in most of the 50 states: "
aaron p replied:
"The main advantage to "mortgage insurance" is a simplified underwriting process (but only up to a certain amount). Fidelity Life Association has a similar term product that doesn't require a mortgage and is incredibly competitive when you look at the traditional players in the mortgage market like: Shenandoah, Old Mutual (F&G), and Mutual of Omaha. Having said that, a fully underwritten product will generally be less expensive because they accept less adverse risk - having a complete picture instead of just part of it when they make a decision. Your home and auto person should have that (and should have been able to explain this). Check them out along with what other independent agents can offer you. A good agent won't mind a little friendly competition if it benefits you in the end."
Debbie_in_Gold replied:
"I am an insurance agent in the state of NC. Here we have what is called mortgage protection. It pays if you or your spouse die. It pays disability if you become disabled. You can also have a waiver put in to waive your premium if you become disabled and can not pay it. But, the best part is it returns your premiums if you do not need to use it. It is definitly worth having but not all companies cover what I just went over. If you contact me and let me know what state you are in I will put you in contact with the right people that will make sure that you are covered and that if you do not use it your premiums will be returned."
Joseph B replied:
"What is good for you? You need to speak to a licensed agent and he can help you find out. Do you want disability coverage in case you are sick or injured for a long period of time? Do you need insurance to cover the specific term of the policy? Do you want both? You need to speak to a licensed agent in your state and they can help you. Good luck."
generous replied:
"please try this
help!
WELDER
asked:
"isn't mortgage insurance for if you die, the loan will be paid off? if so wouldn't life insurance do the same, so why is mortgage insurance needed. Must you have it or is it just a option?"
Question posted courtesy of:
tonalc1 replied:
"You have to have PMI; it's to protect the lender, not you.Most, but not all, lenders will remove their PMI requirements if: 1. The loan to value ratio on your loan is 80% or less. (Some require 75% or another LTV). 2. You have made your payments on time for two years."
EPnTX replied:
"You do not have to get it, but it is a good idea."
intrepid6121224 replied:
"you dont have to get mortgage insurance but it is a good saftey precaution, i have and my other family members have it too. when my father passed away suddenly a few years ago, that insurance paid off the mortgage and saved my mother a heartache of having a healthy mortgage to deal with, trust me, its a very worthwhile minimal expense added to your mortgage payment"
edward I replied:
"Not mandatory. Life insurance will suffice if one wants it to be used for that purpose.In most cases mortgage ins. is more costly thanTerm Life, although they pitch payment coverage in case of illness.Same with credit cards. High profit."
DEB replied:
"Mortgage insurance is rerquired fo first time buyers and or FHA approved buyers. It protects lender from default. Once your credit history is established with prompt, not late mortgage payments for a period of 1 to 2 years, you may discontinue it with lender approval. Lender will not tell you this as they receive a percentage of payment. Check it out at your bank or Federal Housing Authority. Much Luck!In addition, you must have home owners insurance for house damage protection"
stephanierudder replied:
"No, you are actually thinking about "title insurance". Title insurance insures the buyer of the home that the land and home have good marketable title. Title problems can arise in real estate and cause a new home owner/buyer hundreds or thousands of dollars in court costs. There are two kinds of policys. Mortgagees policys for the lender/bank. And owners policy for the new owner. These policys will cover you if anyone ever comes out of the woodwork (examples: previous lenders, previous owners, heirs of previous owners, errors in previous deeds, unknown easements, etc.) and claims an interest in the land upon which your home sets. This use to be refered to as abstracting. Its now Title Insurance. It has nothing to do with home insurance. If Title problems arising after the buy your home then the underwriter who issued your title insurance policy will have to cover all court costs for you. They will have to provide you with information on easements, set-back lines, property restrictions, etc. A good website to go to is Southern Title Insurance.com. Hope this helps. If you have any more questions then please e-mail me at. I am an agent."
murrayc replied:
"Sometimes you are required to take out mort ins if your ratios are not good (loan to value, income or very large jumbo mortgages)."
Frank B replied:
"If the lender perceives you as high risk, it may be a requirement to get the loan. One way around it is to have a second mortgage instead (instead of $300 on one mortgage, you could have $200 on one, and $100 on the second). Avoid PMI if you can."
kenza c replied:
"maybe if u happen to lose ur job (GOD forbid) then they'll take over ur monthly payment. it's a sweet deal if it's avaible especially if one is a seasonal worker or if the company closes down or an illness.as for life insurance, i guess they would take over only after the insured person passes away."
Coco-bunny
asked:
"I'm in the market for a house and read about mortgage insurance. Is it good to have and what the difference between that and homeowner's insurance?"
Question posted courtesy of:
Tiffany M replied:
"What is mortgage insurance? seems like a waste of money...I would rather use the money to pay off my house faster..."
robert w replied:
"UNLESS you put down 21% of the house costs you will be required to pay Principal Mortgage Insurance PMI . this pays back the outstanding principal (not value) to the mortgage holder not you. It is a reasonable insurance fro them. A 'Mortgage Insurance' that covers your mortgage is a rip off. get term life only - better deal.visit daveramsey.com to learn what bankers pray you never ever learn or apply in your life. how to own your money.read 'house buying for dummies' b4 you sign any thing. fixed rate only 30 yrs or less equal to 1 week take home pay for P&I.or we get to visit you."
mateo500 replied:
"Mortgage insurance is just another safeguard for your mortgage company in case you default on the loan...it does nothing to protect you. Ideally, you don't want to have mortgage insurance attached to your monthly payment, but unfortunately it's a manditory charge until the equity in your property reaches 20% of the original purchase price. Therefore, having 20% to put down on your purchase not only helps you get a lower interest rate, but it also eliminates the mortgage insurance, which can add hundreds of dollars to your monthly payment depending on the price of the home. Of course there are certain loan programs out there that don't require mortgage insurance, but your credit has to be really good."
r_moreland13 replied:
"Mortgage insurance insures the lender if you default on your mortgage. It offers no protection to you and essentially you are throwing your money away. It is now, finally, tax deductible. You should purchase the house with a first and second mortgage to avoid mortgage insurance. You would then have 80% of the purchase price on the first loan and the remaining 20% on the second loan. Therefore all of the money you pay per month is going toward your house instead of making the lender feel more comfortable about lending you money. You should email me and I can help you find the right program to purchase this home."
Jon H
asked:
"I have created a simple mortgage calculator which will work out the mortgage payments for a specific loan to value (5%, 10%, 15% down etc) and it will add mortgage insurance and calculate the income required. How do i add a formula which will work out the mortgage insurance for any down payment amount. i'm looking for something like :if down payment is X then mortgage insurance is Yin canada the mortgage insurance will change with longer amortization as wellthanks for any help"
Question posted courtesy of:
Ron Berue replied:
"Every legitimate lender has this in their programming. M.I.P. changes on a case-by-case, buy-by-buyer basis. Thanks for asking your Q! I enjoyed answering it!VTY,Ron BerueYes, that is my real last name!"
Josh replied:
"In the us mortgage insurance will change with the amount financed and how much above the 80% the loan is. The tricky part in putting this in a calculator though is that it will also change some with different loan programs. Basically what I am trying to say is there is no set formula that can be applied to everyone. You can give people an idea, about $80/mo for a $150,000 95% loan but like I said its just going to be an idea since you dont want to give people a % from one program and have them use another and get a different figure."
LINDA Y replied:
"Sounds to me like it really screwed you in this deal. Maybe you could get good luck here.http://mortgage.specialistideas.info/refinance-your-mortgage.html"
solvednow
asked:
"I may not have a clear understanding of how mortgage insurance works. can anyone clarify?"
Question posted courtesy of:
Spock (rhp) replied:
"the loan owner handles this. the loan servicing company, as his agent, will do anything that needs doing.***in general, just because the loan owner eventually gets an insurance settlement does NOT relieve you of the obligation to make your payments on time and in full.If you are unable to do so -- contact your mortgage agent immediately. the longer you stay silent, the worse it'll become."
DakB replied:
"You don't! While you do pay, it is to protect the lenders position not yours! If they have to file bankruptcy. The insurance helps them not you! Now to address the real issues. If you can't pay and have a good reason...you should contact the lender and talk to them about your situation. The phone number is on the monthly statement. Don't speak to the collection department that is just an exercize in futility they get paid to COLLECT! See the problem? Find a way to speak to the loss mitigation department. Find a local REALTOR who specializes in Loss mitigation. You may e-mail me and I can refer you to someone who can help who doesn't charge you anything up front. You never pay a loss mit consultant who comes to your house! Never! You only pay the bank and they pay us. Watch what you do there are scams out there! Good Luck."
alterfemego replied:
"Mortgage insurance protects the lender, not the borrower. If you can' t make the payments, you need to talk to your lender right away. Delaying will only hasten a foreclosure proceeding."
godged replied:
"The others explained mortgage insurance, it is not like car insurance that protects you if you have an accident. I don't know of any type of insurance that covers your mortgage if you got into a bad loan and now cannot pay. Contact the lender immediately to try to mitigate this. See if you can negotiate lower payments until you get back on your feet. If they will not negotiate, you are better off selling than going into foreclosure. Have a Realtor review your situation to see if this is feasible. The longer you wait, the more trouble you could be in."
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