It's likely that buying a home is the biggest financial decision Americans will make in a lifetime. Therefore, it pays for you to protect your investments. There are many ways you can accomplish this task. Home and contents insurance offers homeowners protection against any worst-case scenarios.
Apply the DIME method, as outlined by World Financial Group, an insurance giant.
Add all your outstanding debt (including your mortgage balance), your income and the expected education expenses of any of your children.
Before you dive into the world of mortgages, it's a good idea to make sure you know the key terminology. If you are home shopping and don't have a mortgage preapproval yet, we strongly recommend that you do so. Preapproval will help you understand the different types and lengths available to you, and allow you to make an appealing offer if you find a house that you like. To get started, get preapproved today.
The purchase of a home will be one of the largest financial decisions Americans make in their lives. It is worth protecting your investment. There are many ways to accomplish this task. Home and contents insurance provides homeowners protection against the worst-case scenario that could happen to their property.
Another type of coverage, mortgage protection insurance or MPI, helps homeowners pay the rest of their home loan if they are unable make their monthly repayments. MPI offers additional protection but experts caution that not everyone is able to benefit from this type of coverage. This article explains what US homeowners should know about insurance that protects their mortgages.
Mortgage protection insurance, also known life insurance or insurance on the life, covers the outstanding mortgage balance in the event of death or severe disability.
MPI policies typically cover the principal as well as interest portion of a loan. HOA fees, property taxes, homeowner's insurance and home and contents protection are often excluded. The rider may cover these expenses for policyholders.
You might consider a traditional insurance policy, rather than MPI, if you feel that your family would benefit the most from having money from a posthumous payment for other purposes, like bills, taxes, funeral costs, or even your mortgage.
As your mortgage payments decrease, so does your death benefit from mortgage life insurance.
Lenders like mortgage life insurance for one reason: they are the ones who will get paid when your death occurs. The beneficiaries you choose receive the death benefit from a regular life insurance plan. A mortgage life insurance policy will provide the beneficiary with the mortgage balance.
Mortgage protection insurance (MPI) is a type of life insurance designed to pay off your mortgage if you were to pass away — and some policies also cover mortgage payments (usually for a limited period of time) if you become disabled.
The main difference between Mortgage Protection Insurance and Life Insurance is that Mortgage Protection insurance is designed to cover your mortgage repayments or payoff the mortgage if you die. Life insurance policies, on the other hand, are mainly to protect you and your family and can also pay off the mortgage.
In most circumstances, a mortgage can't be transferred from one borrower to another. That's because most lenders and loan types don't allow another borrower to take over payment of an existing mortgage.