What is Property Mortgage Insurance
Property mortgage insurance is a security product that financially guarantees the lender the chance of a loss in the event of a problem and the borrower defaults on the mortgage. Property mortgage insurance also provides protection from losses when lenders are forced to confiscate property. In addition, mortgage properties insurance reduce or eliminate losses for lenders when a borrower can no longer follow his monthly mortgage payments.Who benefits from Property Mortgage Insurance?
Because mortgage properties insurance exist to provide protection for lenders then they are naturally the first to benefit from mortgage property insurance. Not to forget, home buyers also benefit from mortgage property insurance. Property mortgage insurance allows them to buy a house faster. Property mortgage insurance also greatly increases the purchasing power of homeowners.Property mortgage insurance can reduce the amount of down payment needed to be able to buy a house. In this way, first time home buyers can buy their first home with the help of mortgage property insurance. Also, because mortgage property insurance reduces down payments, home buyers can now apply for loans at more expensive homes.
Recurring home buyers can benefit from property mortgage insurance because they are required to reduce money. Property mortgage insurance helps them get a significant tax advantage. This is because mortgage property insurance is a deductible interest that can be claimed by home buyers during a tax review.
How do borrowers benefit from Property Mortgage Insurance?
If the borrower does not have mortgage property insurance, the lender will require that they put 20% lower on the price of the home purchase. Without guaranteed mortgage property insurance, the borrower must spend years saving for a down payment. The lender will use a large down payment as collateral, replacing the collateral provided by the mortgage property insurance.However, with a mortgage property insurance, the lender will only ask the borrower to pay a down payment of at least 5% or 10%. For example, a borrower without property mortgage insurance saves $10,000 for the required minimum 20% payment. This means that this borrower can only buy a house of $50,000. On the other hand, if the borrower has mortgage property insurance, he only needs to pay a 10% down payment for the $100,000 house with his $10,000 savings.