What is Mortgage Insurance?
Mortgage Insurance (MI) protects the lender if your unable to pay the mortgage payment and guarantees your lender will get paid if you default. When financing a home you have choices, pay 20% or more down, get a second mortgage or get MI (Mortgage Insurance). If you don’t have 20% to put down, MI gives you the best options for financing. Mortgage Insurance should not be confused with Home Owners Insurance.
Do I need Mortgage Insurance?
Can I get rid of Mortgage Insurance at some point?
Yes you can get rid of Mortgage Insurance! Depending on the type of loan you have, the MI may fall off or you can refinance to eliminate it.
Do all loans require Mortgage Insurance?
No not all loans require mortgage insurance. Again, it depends on the type of loan you have. FHA does require MI no matter what. VA does NOT have Mortgage Insurance and Conventional/Jumbo loans do require under certain circumstances.
What is the cost of Mortgage Insurance?
The cost of mortgage insurance varies. Some of the variables that determine the cost are credit score, loan amount, loan type, how long the loan is financed for and loan-to-value. There may be more variables depending on the loan type.
Is Mortgage Insurance tax deductible?
The answer is yes, mortgage insurance could be tax deductible. You should always consult a tax adviser to see if your mortgage insurance is tax deductible.
Do I need to Qualify for Mortgage Insurance?
If you have been approved for a mortgage loan then you are qualified for mortgage insurance.
What are the Pros Mortgage Insurance?
- Avoiding high interest rates of a second mortgage
- You are not stuck with MI for the life of the loan, once your loan-to-value reaches below 80%, you can refinance and remove the MI
- Less money down
What are the Cons of Mortgage Insurance?
- The cost of Mortgage Insurance varies and is expressed in terms of the total loan value depending on the loan term, loan type, coverage amount and frequency of payments
- Higher payment with either MI or a second mortgage as a result of putting less than 20% down