Maybe you are keen on understanding property mortgage insurance. In this article, we are going to discuss about it.
- The definition of Property Mortgage Insurance
Property Mortgage Insurance is a product which protects the lenders from financial loss and any problems that occur and it also insures the borrower of a mortgage. Moreover, a lender can get protection too from the loss which may happen because of property foreclosing. When a borrower cannot keep up his monthly payments for the mortgage, the lender will find a less loss because of property mortgage insurance.
- Who will get advantages from Property Mortgage Insurance
The lender is the first one who will take advantages from property mortgage insurance. It goes without saying because property mortgage insurance aims to provide protection for the lenders. But not only the lenders, the homenbuyers can also take advantages from this insurance by buying the houses sooner. This condition can give benefits also for homeowners to have a strong buying power.
Before buying a house, people need to provide the down payment first. Property mortgage insurance helps the homebuyers by reducing the amount of downpayment they should pay. Because of the lower downpayment, the homebuyers can appky for a loan to buy a house which has higher price.
For homebuyers who have ever bought a house before, can get benefit from property mortgage insurance because they put less money and get a higher significant tax advantages. This can happen because property mortgage insurance’s interest is deductible so during the tax review, homebuyers have already been able to claim.
- The way borrowers can take advantages from Property Mortgage Insurance
Property mortgage insurance can be used as the guaranty for the lenders, so the borrower must pay 20% of the purchase price before they get the house. That’s why without property mortgage insurance, the borrowers may spend some years to pay forthe down payment by themselves.
If the borrowers has property mortgage insurance, they need to pay only 5% until 10% of the price for the down payment. For instance, a borrower has saving around $10,000 for the down payment. Without property mortgage insurance, the borrower only affords a $50,000 house because the down payment is 20%. While if the borrower has a property mortgage insurance, he can get a $100,000 house because he only needs to pay 10% down payment.
- The Payment of Property Mortgage Insurance
Generally, borrowers are the name for people who pay for property mortgage insurance. The premium of property mortgage insurance must be paid at closing, depends on the mortgage premium plan and the percentage for coverage. This percentage is taken from the mothly payment compared to the cost of the property mortgage insurance coverage.