Mortgage insurance is a financial product that protects the lender against losses when a borrower defaults on the loan. It is required when the borrower puts less than 20% of the purchase price down on the property. It also protects the lender against losses if the borrower dies before the loan is completed.
Mortgage insurance comes in many forms. There are lender-paid mortgage insurance and borrower-paid mortgage insurance. In most cases, lenders require mortgage insurance if they are taking out loans for low down payments. Moreover, it is required for Federal Housing Authority loans, which require extra insurance to be paid by the borrower.
Mortgage insurance is a type of insurance that protects the lender in the event of default, and pays the lender the principal amount in the event of the borrower’s death or disability. Its price depends on the type of mortgage you take out, but generally, you will pay anywhere from 0.5% to 1% of your loan amount each year.
A common type of mortgage insurance is borrower-paid mortgage insurance (PMI), which is rolled into your mortgage payment. It can cost between $1,000 and $2,000 per year and can be as low as $83 to $166 a month.