Different Types of Mortgage Insurance
With a lower down payment you can get more money for purchasing a new home, furniture, etc by taking out a mortgage. The benefits of mortgage insurance policies made the common men as well as businesses to improve their financial conditions. Currently in the market, various types of mortgage insurance policies are being available. It cares for the lenders and eliminates the risk of loss associated with loan defaults from borrower side. So, it is a safety option for the lenders only also at any condition this coverage plan will not pay off the mortgage if the borrower fails to clear the loan amount.
Types of Mortgage Insurance:
If you sell the property or cancel the policy you can reclaim any unutilized division of the premium you paid.
Through nonrefundable mortgage insurance comes with inexpensive premiums compared to refundable policies. There is no provision of getting back any cash against of cancellation of the live policy.
- Lender paid premiums
Here the lender pays the premium amounts of the insurance policy in return for a high rate of interest for the life of the mortgage. Lender paid mortgage insurance policies cannot be cancelled during the policy term and you need to pay the high interest charges.
- Borrower paid premiums
This type of mortgage insurance plan requires the borrower to pay the interests or premiums. Through three ways the borrower can pay the premiums i.e. single, monthly and annual. If you will chose the single premium scheme then you will be charged extra money and need not to make any further periodical payments. In monthly pay out schemes the closing costs on the mortgage will be lower than the single paid premium amount. Likewise choosing the annual option you have to pay the closing amount as well as the premium amounts.
Benefits of Mortgage Insurance:
- Buy a home easily! This policy lets the borrower to get maximum loan amount from the lender and purchase the property soon.
- Pay better interest rate. Choosing this insurance plan, the borrower gets viable mortgage interest rates from the lender according to the down payment.
- Negotiate the down payment amount. Yes, with this insurance plan the borrower can pay a very small part of the whole amount as down payment. Also the lender agrees because he is protected with the policy.
- Get rid of renting. You will be more beneficial after buying the home instead of paying huge rents for that.
- Get help in purchasing household equipments. The leading financing companies are also offering aids for purchasing appliances and home-improvement materials. So, mortgage insurance Canada will be a great idea for the new home buyers.