What is Mortgage Insurance? This is a type of insurance that protects a mortgage lender or titleholder from a defaulted borrower. Or other cases like death or being unable to meet contractual obligations in getting a mortgage.
It can also be seen as Private Mortgage Insurance (PMI). Certified M. Insurance Premium (MIP). What they all have in common is to their duty to make sure a lender or a person who own a property gain in a specific case of loss.
While on the other hand, M.I is created to protect heirs if a borrower dies and yet to pay up the mortgage payment. Depending on the contract or terms of the policy, it may pay off to the heirs or lender.
Private Mortgage Insurance
When a borrower is given a condition when buying a conventional Mortgage loan is referred to as a Private M.I (PMI).
PMI offers help to the lenders and no not the borrower, just like other M.I. PMI is provided by a private insurance company and the lender arranges it.
A PMI is needed mostly when a borrower didn’t meet the normal deal of down payment above 20%.
Qualified M.I Premium
You will need to pay for a qualified M.I premium. If you are getting an FHA mortgage, which also offers a similar type of insurance.
MIP is quite different. They have a policy that everyone including those with FHA mortgage will purchase this type of insurance. Irrespective of their down payment size.
Mortgage Title Insurance
This M.I helps in protecting loss in a case where the sale is canceled due to issues with the title. It helps a beneficiary in cases of loosing especially during the period of a sale. And the property is owned by someone other than the seller.
Before the mortgage closes, a title search will be performed by a representative like a title company employee. An attorney, etc.
The policy is made to disclose any liens that are placed on the property preventing the sale of the property by the owner.
Mortgage Protection Life Insurance
When borrowers feel paperwork when starting a mortgage they are offered mortgage protection life insurance. However, this insurance can be declined by a borrower when offered.
To do that, a borrower will need to sign a lot of forms and waiver to be certain of the decision. The paperwork is there to make sure you know what you doing and you understand the risk that involves having a mortgage.