Mortgage Insurance?

Mortgage Insurance protects a person in cases of non-payment of the mortgage loans taken by him within a particular time span. The reason for this non-payment may range from death to unexpected job-loss to illness to accident. The claims associated with the Mortgage Insurance generally has time span of 1 year.

This mode of paying off the mortgage loan through insurance in cases of respective non-payments of regular outstanding debts has some specifications. The debts accumulated by the policy holder before registering for the Mortgage Insurance are not included in the insurance policy. The medical conditions of the insured person prior to the insurance initiation such as pregnancy, physical disorder, etc are not considered within the insurance coverage until and unless the policy holder backs it up with proper medical evidences.

The costs associated with the Mortgage Insurance are included in the regular payment made by the debtor to the creditor on a monthly basis. This cost is charged in case of private mortgage insurance scheme where the down payment amount is less than 20% of the value of the mortgaged house. Hence for a loan having a loan-to-value (LTV) of greater than/equal to 80% attracts an additional cost. This type of insurance is also known as PMI (Private Mortgage Insurance ) because the back up involved in such cases usually involves private players and not the government.

This Mortgage Insurance term would be more clear in case of Mortgage Life Insurance. This insurance covers the death of the debtor. Mortgage Insurance comes handy in scaling down the debtor's down-payment amount further from 20% to 5% or 10%. This Mortgage Insurance increases the purchasing power of the borrower opening more options before them.

Benefits associated with Mortgage Insurance involve tax deductions for those purchasers buying homes repeatedly. (EconomyWatch)

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