What is Mortgage Insurance?
- brkshelley
- Jan 13, 2025
- 1 min read
Whether you're a first-time homebuyer or looking to refinance, mortgage insurance could be a key part of your home-buying journey. Here’s what you need to know:
What is Mortgage Insurance? It’s designed to protect your lender in case you're unable to make your mortgage payments. If you're putting down less than 20% on a home, you'll likely need mortgage insurance.
Why It's Important:
Protects your lender, making it easier for you to qualify for a mortgage.
If you're purchasing a home with a down payment less than 20%, it’s mandatory.
It allows you to buy a home with a smaller down payment.
How Much Does It Cost? Mortgage insurance premiums typically range from 0.6% to 4.5% of the loan amount, depending on your down payment and mortgage amount.
Remember: Mortgage insurance isn't the same as home insurance. It covers the lender, not you. But it’s still a vital step toward homeownership!
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It’s interesting how the down payment amount shifts the whole structure of the loan. Many people don’t realize that putting down less than 20% means dealing with cost of mortgage insurance, but it’s often the only way to get into the market sooner.