Mortgage Insurance

Mortgage Insurance is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay Mortgage Insurance. Mortgage Insurance plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. This means that you can buy a home sooner without waiting years to accumulate a large down payment. Many home owners are now choosing Level Term Life Insurance because it is much less expensive.

What Loans Are Covered?

Generally, this applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. Although the HPA does not provide the standards for what constitutes a "high risk" loan, it permits Fannie Mae and Freddie Mac to issue guidance for mortgages that conform to secondary market loan limits. Fannie Mae and Freddie Mac are corporations chartered by Congress to create a continuous flow of funds to mortgage lenders in support of homeownership.

What is Mortgage Disability Insurance?

Paying the mortgage can be nearly impossible when you're bedridden with an illness or injury. Mortgage disability insurance pays the bill for you if you become disabled and unable to draw income to pay your mortgage payments.