Affordable Life Insurance Protection for Your Family
What is Life Insurance for Mortgage?
A mortgage life insurance policy is an insurance policy designed specifically to repay mortgage debt in the event of the death of the borrower.
These insurance policies are different from traditional life insurance policies because a mortgage insurance policy doesn't pay unless the borrower dies while the mortgage itself is still in existence.
Many people choose to purchase a mortgage term life insurance policy to provide the funds needed to pay off any remaining balance owed on their home mortgage loan upon their death.
By choosing the appropriate duration of coverage matching the time left on your home loan, and the amount of coverage that matches the amount you currently owe on the loan, you can guarantee your family will having the money necessary to pay the mortgage and remain in the home they shared with you while you were alive.
How to Protect Your Mortgage Loan with Life Insurance?
Mortgage life insurance is supposed to protect the borrower's ability to repay the mortgage for the lifetime of the home mortgage loan. This is in contrast to Private Mortgage Insurance, which is meant to protect the Lender against the risk of default on the part of the borrower of the mortgage loan.
Do You Have to Own Life Insurance to Get a Home Mortgage Loan?
You aren't required to have life insurance coverage to qualify for a loan for a mortgage, but purchasing life insurance before buying a house can benefit you and your family.
Is Mortgage Protection Insurance a Good Idea?
Mortgage protection insurance could provide you with coverage even if you are in poor health. If you are unable to qualify for traditional life insurance policies, this kind of insurance plan can protect your family from defaulting on the mortgage upon your death.
What to Know about Mortgage Insurance Protection?
Mortgage Insurance Protects the Lender from default on the loan by the borrower of the mortgage loan.
Mortgage insurance, also commonly known as a Mortgage Guarantee, minimizes the risk for lenders if the borrower were to default on the loan. This type of insurance policy can compensate a financial institution if the borrower were unable to pay back the debt owed on the mortgage. Essentially, this insurance policy protects the lender.
Who Pays PMI Insurance Premiums?
Lenders require Mortgage Loan Borrowers to pay for the PMI, or Private Mortgage Insurance, when they cannot afford to make a down payment on a new home equal to 20% of the property's purchase price.
When Can I Stop Paying for Mortgage Insurance?
In most cases, long-time Federal Housing Administration (FHA) borrowers can stop paying US Department of Housing and Urban Development (HUD) risk-based mortgage insurance once they've built enough equity, sometimes in as little as 11 years without having to refinancing the mortgage loan.
Does PMI Drop Off When You Reach 80 Percent?
The law generally provides two ways to remove PMI from your mortgage loan: (1) requesting PMI cancellation or (2) automatic or final PMI termination.
Request PMI Cancellation – You have the right to request that your servicer cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home.
This date should have been given to you in writing on a PMI disclosure form when you received your mortgage loan.
How Much Down Payment Is Needed to Avoid Mortgage Insurance?
Make a 20 percent down payment to avoid paying upfront mortgage insurance.
Your mortgage lender will not shoulder as much risk when your down payment for a home is equal to 20 percent or more, and you will not have to pay for mortgage insurance if you can put down 20% of the purchase price on a home when buying a property.
Should You Buy Mortgage Insurance?
Mortgage life insurance is helpful in some cases, but you need to evaluate alternatives and look at the big picture before making a decision.
It may make more sense to buy an individual life insurance policy on your own. A standard term life insurance policy can also protect your loved ones and pay off any mortgage debt (and more). Your beneficiaries can use the death benefit from a term life policy to pay for your mortgage, and any other debts or financial needs they have.
What is Mortgage Protection Plan?
A mortgage protection plan is a life insurance policy that is used to protect the homeowner's family in the event of their unexpected death.
A mortgage protection plan allows you to decide who the coverage amount (also referred to as a death benefit) goes to and how the money will be disbursed.
For example, the proceeds from your plan can go to your spouse and/or children to be used as they see fit, including to pay off the outstanding balance owed on the home mortgage loan.
What is Home Mortgage Life Insurance Policy?
Mortgage life insurance is a term life insurance policy for either 15, 20 or 30 years, usually. It's designed to match the duration of your home loan and balance owed.
Essentially, the life insurance follows the amortization schedule of the loan, reducing the death benefit over time as the loan balance decreases each year.
Do I Need Mortgage Insurance?
Mortgage Requirement – One reason homeowners need insurance is that mortgage companies require it. If you take out a mortgage, your house is the lender's collateral, so your lender will require you to buy a minimum level of hazard insurance to guarantee the mortgage is paid off upon your death, should you die before fully repaying the loan.
Is Life Insurance a Legal Requirement for a Mortgage Loan?
No, it is not a legal requirement. Many mortgage lenders may require mortgage life insurance to protect themselves. Also, there have been cases where a judge has required a divorced spouse to carry life insurance protection to cover the balance owed on a home mortgage, or protect minor children, although these cases would depend on the situation.
Does Mortgage Insurance Pay Off a House If the Owner Dies?
Mortgage insurance death benefits are typically meant to pay off the lending institution that holds the mortgage on your home in the event of a death, disability, or critically illness. The insurance ensures that your family and dependents can hold on to the security of their home as they face a new adjustment period. That way, they can remain in the home if you die prematurely.
What is the Best Insurance for Mortgage Protection?
The most popular – and best – alternative to mortgage protection insurance is a standard term life insurance policy.
It’s like a mortgage protection insurance policy in that you pay for the policy for a certain amount of time, but it doesn’t come with all of the strings attached that mortgage protection insurance does. It pays out a death benefit to your beneficiary, and that person or persons may use the death benefits to pay off the mortgage.
Private Mortgage Insurance (PMI)
The most common type of mortgage insurance, Private Mortgage Insurance (PMI) helps cover the loan. Typically, these policies allow lenders to reduce the terms of the loans, allow individuals to qualify for more mortgages. For example, most loans require a 20% down payment, however with a PMI that number can be much less. Depending on the type of PMI, a monthly or upfront premium may be paid:
Benefits of Mortgage Insurance
Mortgage insurance allows potential buyers to gain access to the home market for a reduced down payment. Borrowers are also given more flexibility since there is a range of payment options to cover their mortgage insurance depending on the loan and insurance selected. Mortgage insurance provides a safer loan to the lender and allows the buyer to cancel when 20% of equity is reached on their homes.
Mortgage Life Insurance Quotes
Top Pick – JRC Insurance Group
JRC Insurance Group helps you shop, compare and save on life insurance. Regardless of your age or health background, we'll shop our 40+ insurance companies and find you affordable life insurance you need to protect your family and fit your budget. Compare the best life insurance rates for savings up to 73%. Get Your FREE Quote.
Highly Recommended – Haven Life Insurance Agency
Haven Life uses the information provided in your application to make an instant decision on your application. Healthy, qualified applicants (based on the information provided in your life insurance application) can be insured immediately with no medical exam while other applicants can receive immediate coverage pending a medical exam.
Applicants age 60-64 are eligible to apply for up to $1 million in coverage; subject to underwriting approval.
Some qualified applicants (U.S. citizens up to the age of 59) will be able to finalize coverage without the need for a medical exam. The majority of applicants are still required to take a medical exam.
Keep in mind: Issuance of the policy or payment of benefits may depend upon the answers given in the application and the truthfulness thereof.