Welcome to Joe Knows Mortgages MINUTE, where we answer your mortgage questions.
On this week’s Joe Knows Mortgages MINUTE, we answer the question:
What is Mortgage Insurance?
Typically, if a borrower makes a down payment less than 20% of the purchase price of the home on a conventional conforming loan, they will need the loan insured in some way.
Mortgage Insurance is insurance that is paid for by the borrower to a third party mortgage insurance company in order to insure the lender from default on the mortgage. Please keep in mind that this insurance does not protect the borrower. The only way that mortgage insurance benefits the borrower, is it allows the borrower to put down less than 20% on certain loan types. 20% is considered the magic number because it is generally accepted as the cost to a lender to foreclose on a property.
There are many different forms of mortgage insurance; some loans do not require it and with some loans you can not avoid it. It is recommended that you contact a mortgage loan originator at Morgan Financial to review your options and choose one best suited for your specific situation.
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