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Mortgage Protection

 

Mortgage Protection

Private mortgage insurance is a financial guarantee that insures lenders against loss in the event a borrower defaults on a mortgage. If the borrower defaults and the lender takes title to the property, the mortgage insurer reduces or eliminates the loss to the lender. In effect, the mortgage insurer shares the risk of lending the money to the borrower.

*Note – Mortgage insurance should not be confused with mortgage life insurance, which provides coverage in the event of a borrowers death, or homeowner’s insurance, which protects the homeowner from loss due to damage from fire, flood or other disaster.

 

Who is mortgage insurance for?

All home buyers can benefit. It allows them to become homeowners sooner, and it dramatically increases their buying power – excellent benefits from a buyer’s perspective.

First-time buyers can use a low down payment to help them afford their first home, or to purchase a more expensive home sooner.

Repeat home buyers can put less money down and gain significant tax advantages because they will have more deductible interest to claim. They can also use the cash they would have used for a large down payment for investments, moving costs or other expenses.