Mortgage insurance is a policy issued on your mortgage loan that allows your lender to recapture any money lost in the event of an early default and/or during a foreclosure process. The sole purpose of this type policy is to lower the amount of risk for the lender.
Does mortgage insurance really deserve the bad reputation that precedes it?
It does cost you, the borrower, more money every month, which translates to a higher mortgage payment and less money in your pocket.
But, let’s explore what it does accomplish.
The policy allows the borrower to use a lower down payment when purchasing a home. This can be a huge benefit to first-time buyers.
It also allows lenders to lend more money to potential buyer homebuyers by having the ability to recapture funds in the event of a default.
The bottom line is mortgage insurance assists a very large segment of buyers annually into the market place. According to US Mortgage Insurers (USMI), mortgage insurance assisted nearly 2 million conventional borrowers in 2021 alone.
In my opinion, the mortgage insurance policy could be one of the largest contributors to the American Dream of homeownership across the nation.
Opportunity as opposed to punishment!
If you’re interested in mortgage insurance or have any questions, give us a call!