Purchasing a home is the biggest financial decision that a person makes in his or her life. In almost all cases, the buyer will need to take a home mortgage loan to purchase his dream home. Once the buyer takes the loan, he or she has to commit to paying the loan installments on time. You may have heard of cases wherein the house was placed under foreclosure just because the installments were not made on time.
The reasons for not paying the installments can be many; it could be that the homeowner lost his or her job, or is grievously injured or ill, or in the worst case scenario is dead. This would mean that the money borrowed for purchasing the home does not get returned on time. In such cases, it is the family members who bear the brunt of the situation. They will be burdened to pay off the loans.
There is one measure that a homeowner can take to ensure that the mortgage is paid off on time no matter what the situation. The growing trend is to take a Mortgage Insurance. This will ensure that in the event that a homeowner cannot pay the loan installments on time for whatever reason, the insurance will take care of it for him or her.
When a homeowner takes a mortgage, the bank expects that he or she makes an initial large down payment. This payment should constitute at least 20 percent of the loan amount. If the borrower is unable to make that payment, then the bank expects them to get a Mortgage Insurance. This insurance will safeguard the lender in case the borrower fails to pay the installments on time.
Basically a Mortgage Insurance covers up for the homeowner just in case he defaults on his or her mortgage loan. But this insurance will help you cover only the loan money and will not provide for anything else. Hence it does not become a substitute for a homeowners policy.
The policy can be taken as a single coverage policy or a joint coverage policy. The borrower may also choose to end the policy just before the mortgage payment ends or he or she may want it to run concurrent with the mortgage itself. The insurance also happens to give the borrower a provision to get a premium waiver in case of a critical illness, although it has a specific list as to what can be counted as a critical illness.
The benefits of a mortgage insurance are plenty; however there are a few things that the borrower needs to be aware of. Some companies charge high premiums, have hidden charges and make the claiming of an insurance an absolute headache. Hence it is essential that you get your insurance done from a well known and a reputed company who will explain the policy to the borrower in a clear manner.
It is also a good idea to compare the insurance terms and conditions of different companies before you finalize on the one that you will borrow from.
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Mortgage insurance helps you pay your home loan when you are unable to pay the loan installments on time. Get a mortgage insurance done for your house now. Click here for more information.
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