What is mortgage insurance?

Many people get confused by the term mortgage insurance because the term can refer to more than one different type of coverage. Understand these different types of policies so you can shop wisely and choose the best type of mortgage protection insurance for your needs.

mortgage life insurance

If you get a new mortgage, or if you refinance, you’re bound to get offers for a product called mortgage life. These offers usually arrive in the mail in the form of letters or postcards. They offer to protect your home loan in the event you die, become disabled, or become seriously ill.

These are actually term life insurance policies that can have a benefit and duration that is adjusted to work well for your own home loan. For example, if you have a 20-year mortgage, you may choose to get a 20-year term policy. You can also select a death benefit that is close to the amount you owe on your home. You can even add a little extra coverage to pay off other bills and debts.

There may also be riders you can add to the term policy that will cover you in the event of disability or critical illness.

You can choose a level benefit policy that will stay the same for the entire period. You can also choose to select decreasing term life insurance. The benefit will decrease over the policy term, which may reflect the fact that your home loan balance is also decreasing. This should be a bit cheaper.

If you don’t have life insurance that can protect your home if you die or become disabled, this product is one to consider. If it’s already well covered, you may not need it. If you have life and disability coverage through a job, now may be a good time to buy a policy on your property, even if you change jobs.

Private Mortgage Insurance

I have to mention this product because the name sounds a lot like mortgage insurance. This is actually a different product that some lenders require to protect your investment in the event you are unable to make payments. This type of coverage will not relieve you of your payment obligation, but it is intended to protect the mortgage company.

If you do not have 80 percent equity in your home, the mortgage company may require this coverage.

foreclosure insurance

Before the recession, this product was easier to obtain as a stand-alone product. However, you may still be able to get a rider on your home insurance policy that will make payments if eligible homeowners lose their jobs. Many homeowners don’t even know this type of coverage exists, but it can be very valuable in the right situation!

The rider may cost more, but it can save your home if you lose your job. Y if you qualify for benefits. Make sure you understand how you have to qualify so you don’t waste your money. Some companies have pretty strict rules.

What is the best mortgage protection?

The best policy will be one that protects your family’s home. You should consider the types of coverage you already have, what to buy, and then try to select the coverage that is right for you.