Posts Tagged ‘pmi’

I know that both sound the same, Mortgage Protection and Private Mortgage Insurance (PMI), but please be advised that they are actually very different from each other.  Knowing this little piece of information can be what could save your family from losing their home.

Private Mortgage Insurance (PMI) is a risk-management product that protects lenders against loss if a borrower defaults. Most lenders require PMI for loans with loan-to-value (LTV) percentages in excess of 80% (the buyer put down less than 20% of the home’s value upon purchase).[1]  Basically, PMI is an insurance required by your lender when you take out a mortgage.  You probably don’t recall signing agreeing to it when you did your closing, but it was there.  What is important to know about this is that this insurance protects the bank, not you, in case you can’t make your mortgage payments.  Therefore, PMI will not protect your family from losing their home because the payments can no longer be made.

Mortgage Protection Insurance can protect your loan in case of an unexpected tragedy.  It is a policy that you would purchase from an insurance agent.  Without a Plan, your family would still have to make the monthly mortgage payments. This way, your family won’t lose their home at a time when things are already emotionally difficult due to incidents such as death, disability or even a critical illness.  Depending on your eligibility, your plan benefits may include:

 

  • Death – Designed to pay off your mortgage or equity loan in the event of your death.
  • Disability – Can make your mortgage payments if you cannot work due to an illness or injury.
  • Level Premium – Premium payments that remain level and do not increase.
  • Return of Premium – Can return all of your premiums if benefits are not used.

Many families are forced to have PMI protection, and believe that it will protect them from losing their home, but in reality it only protects the bank. This leaves many families homeless when one of the main income earners passes away.

If you’d like to protect your family and their home with mortgage protection insurance, we’ve got good news – it’s affordable and we can help! Just click here and fill out the form.

[1] Investopedia. (n.d.). Private Mortgage Insurance – PMI Definition | Investopedia. Retrieved from Private Mortgage Insurance – PMI: http://www.investopedia.com/terms/p/privatemortgageinsurance.asp

 

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