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Why do I need mortgage insurance?

Is there any reason to pay for mortgage insurance if you don't have to? If I pay off my whole mortgage on time, is there any benefit for me or is mortgage insurance entirely for the lender's protection? by WWhite_475_290 from Albuquerque, New Mexico. Aug 2nd 2012 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,588 contributions

Mortgage insurance is entirely for the lenders protection against losses they might have as a result of a foreclosure. If you have 20% equity or more, then you will not need to pay mortgage insurance.. if you have less than 20%, there are other options such as lender paid MI, where you pick a higher interest rate, and the lender pays your premium, or Split paid Mi where you pay some, and the lender pay some.. There is ZERO benefit to you as a borrower to pay MI.. if you can afford the extra down payment on a purchase, you're better off, since you will get a better interest rate, and you won't have the added cost of MI.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Aug 2nd 2012
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Peter Botros (PeterBotros)
#71 ranked lender in New York - 895 contributions

mortgage insurance is for the protection of the lender in case of default from the borrower, generally you need mortgage insurance if you put less then 20% for down payment.

Aug 2nd 2012
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,875 contributions

Mortgage insurance is for the lenders protection. I call it the necessary evil. Simply put, you either put 20% down, or you have to deal with the insurance somehow.

Aug 2nd 2012
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Chris Mylin (chrism_408_673)
#58 ranked lender in Ohio - 32 contributions

as the others have said, if you can put 20% down then you will not need to deal with the MI however if you cannot then you will have to. Unlike the others, I do believe that there is a benefit to you. Statistics show that loans made with less then 20% down will have a higher foreclosure rate and therefore placing more risk on the lender. The benefit to a borrower is the ability to qualify for a mortgage when they do not have a 20% down payment.

Aug 2nd 2012
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#135 ranked lender in Florida - 787 contributions

lender protection ONLY over 80% LTV

Aug 2nd 2012
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Brian Bagon (bbagon)
#3 ranked lender in New Mexico - 4 contributions

Mortgage insurance is a insurance that protects the lender for defalt on the loan. If you put less than 20% down a property you will have to pay mortgage insurance. You basically have 2 options to pay. You can pay monthly, this is added to your payment everymonth, or you can pay the entire premium up front. The 1st option is what most people do. But there is a trend, when buying a home, to negotiate the upfront mortgage insurance to be paid by the seller of the house. Please call me if you have any other questions. I am a local lender here in Albuquerque. 505-221-6933

Aug 2nd 2012
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