Mortgage Insurance Protection

Check out what you need to know before you go in for mortgage protection insurance. Most lenders require this tyoe of insurance in case you have to make a down payment of less than 20 percent.

Guidlines on Mortgage Insurance Protection

While paying the premium of any Government approved loan, you need to pay 2.25 percent of the loan amount at the closing and the additional monthly fee. This premium provides protection for the life of the loan. If you sell your Government approved loan, you may need to repay the amount.

In case of mortgage insurance, you need to pay two months premium at close and the additional monthly charge. The amount depends on the amount of coverage required by the lender, and the type of mortgage protection insurance you are opting for.

You also need to know the facts about the cancellation of the policy. According to the agreement, you can cancel the insurance once you reach a certain equity. For example, if you have 20 percent equity (which means 80 percent loan-to-value), you can stop paying insurance if the agreement says so.