When ever we think about mortgaging property, we have to little bit think and understand about that phrase. Now we are going to discuss what does that property mortgage insurance means.
An insurance policy that protects a mortgage lender or title holder in the event that the person who borrows defaults on the payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage. Mortgage insurance can refer to private mortgage insurance (PMI), mortgage life insurance, or mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss.
Private mortgage insurance may be called “lender’s mortgage insurance” (LMI) if the premium on a PMI policy is paid by the lender and not the borrower. This is typically done in exchange for a higher rate or fee structure on the mortgage itself.
Beneficiaries of mortgage insurance:
In a view of fact that, property mortgage insurance initially offers security to the lenders, this means that lenders are the first to achieve benefit from such mortgage insurance. Homeowner’s insurance insures the property: dwelling, personal property, other structures on the property, etc. Private mortgage insurance pays the mortgage in case of the death or disability of the mortgagor. Homeowner’s can also get facilitate from such property mortgage insurance. It allows them to purchase their own houses as quickly as possible as it improve the purchasing capability of owners.
Property mortgage insurance cuts down the sum of advance deposit that is must to acquire property. Thus when the home owners go to the market it will help them to buy property. More over as it decreases the advance payment as well as the owners can easily submit an application for loan for a luxurious house.
Once again owners can achieve an advantage by such mortgage insurance due to the reduced advance amount. It supports the owners in achieving major tax benefit because the owners can demand the interest through tax reviews.
This is also a matter of thinking that how the borrower be benefited through property mortgage insurance. Yeah property mortgage insurance provides a great facility to them. For example if any one want to buy his/her own house and don’t acquire property mortgage insurance, she/ he definitely go to the lenders and they will demand say 20% in advance of the whole consideration. For such an amount like 20% of consideration price, this becomes a problem for a single person to pay off such a big amount. Without any surety lenders will charge more amount as an advance.
Where as, if you acquired property mortgage insurance, they will charge a little advance say 5% or 10%. Let us take a real example, if a person saves $20,000 with an advance of 20%. This actually means the owner is capable to purchase a $100,000 worth of house. While if a person acquired property mortgage insurance, only 10% down payment is required for a $200,000 house in the limits of $20,000 savings.
Generally borrowers are the persons who are liable to pay for such property mortgage insurance. The first installment is payable at the end of the year. The monthly installment can be differ, depending upon the premium method to complete the whole expenditure.