What is Mortgage Protection Insurance?
Owning a home comes with major financial responsibility. Once you sign the papers on your home, you’ll be paying a significant amount of money on a monthly basis for your home. Even if you paid for your home with cash, you’ll still owe some sort of taxes on the property. But most people don’t have all the necessary funds to pay for their home in full, thus they pay a monthly mortgage payment for the duration of the loan they’ve taken out. But what if something happens and you can’t pay your monthly mortgage payments? That’s where Mortgage Protection Insurance comes in handy.
Why Is Mortgage Protection Insurance Important?
You’ll most likely lose your home in foreclosure and all the money and love you’ve put into it over the years. To help prevent that from happening, Mortgage Protection Insurance (MPI) will protect your home in case of an emergency happens and you can’t pay your mortgage. This can be anything from a health issue that prevents you from working or even losing your job. In the worst-case scenario, MPI can also pay off the entire balance of the mortgage if the borrower passes.
The great thing about Mortgage Protection Insurance is that it’s a safety net for homeowners. The future is uncertain and you never know what tomorrow may bring. Being prepared for the unknown will provide homeowners peace of mind knowing that their mortgage is taken care of in case something happens.
What Is Mortgage Protection Insurance?
Mortgage Protection Insurance is basically a type of insurance that covers you in the event of an emergency. The monthly premium cost will vary, depending on a number of factors. Some of these factors include the amount of the loan, how old the borrow is and their health. There are some Mortgage Protection Insurances that cover the bill if there is a disability, with those premiums depending on the borrow’s job.
If you pass and still owe on your mortgage, the Mortgage Protection Insurance policy that you have will kick in. The insurer will pay off the loan directly to the lender. Any partners, spouses or children of the borrow that passed won’t have to worry about a monthly mortgage payment. Thus, they won’t have to worry about losing their home.
But if you have a disability or lose your job, most Mortgage Protection Insurance policies will cover mortgage payments for up to one year or even two. These polices usually cover both the principal and interest of a mortgage payment. Other fees like property taxes, homeowners association dues or homeowner insurance aren’t typically covered. You can possibly add in a contract rider to cover these extra expenses.
Also, you don’t have to obtain Mortgage Protection Insurance for a loan approval. You can opt to purchase a policy whenever you’d like coverage to begin. It will be an extra cost that’s added to the monthly loan payment.
Don’t Confuse MPI for PMI (Private Mortgage Insurance)
MPI is commonly confused with PMI, or Private Mortgage Insurance. While MPI protects you, PMI protects the lender from any losses if you fail to pay your loan. Typically, PMI is needed when you don’t have at least 20% down to put down on a loan amount.
Pros Of Mortgage Protection Insurance
A huge pro for MPI is that it’s usually issued on a “guaranteed acceptance” basis. This means you’ll most likely get approved, which could be beneficial for those with health issues and have to pay higher rates for life insurance.
Let Us Help!
Let Buckalew Financial Services help you find the best Mortgage Protection Insurance for your needs and budget. We’ll shop around for you so that you don’t have to worry about this on your own. We’ll evaluate the various pricing and features of different MPI policies and provide you with different options.