Mortgage Insurance Companies are essential because they provide both the lender and the borrower with coverage in case of default on the mortgage loan. However, several factors must be considered before deciding on an insurer.
The home buyer should first decide if they really need mortgage insurance. Since Mortgage Insurance Companies cover the payment in case of borrower’s death, illness, or financial constraints, one should consider the other insurance policies that cancel out mortgage insurance. For instance, most life insurance policies usually cover for defaults on mortgage upon the beneficiary demise. If you have such a policy, then applying for mortgage insurance is not necessary. You should contact your life insurance provider and inquire about this option.
Comprehensive research on mortgage insurance companies is very vital before selecting an insurance provider. Different insurers offer different rates and conditions on mortgage insurance. They often employ different mathematical formulas and criteria to determine what percentage of the total property value they will cover and the rates that they will charge. There are a number of online resources that list the different insurers, their rates, and requirements.
One way of understanding mortgage insurance companies is to understand the laws that govern them and the various regulations that control them. Their activities are usually regulated by government agencies and private consumer protection institutions. Being aware of your rights as a home buyer pursuing a mortgage option will save you time and money in selecting the right insurer. Information such as cessation of paying insurance premiums once you have paid 78% of the principal amount is contained in the government regulation. Such information would save you a lot of money as well as alert you on particulars to look out for. All this is contained in the respective government department’s websites and publications.
The next step is to find out what measures to take so as to qualify for the best rates. These include calculating your credit score, clearing your debts including utility bills and credit card balances and increasing your savings. If you successfully take care of this, you will not even need coverage from a mortgage insurance company as your credit rating will be on the safe side. Sorting out your finances will get you higher financing at lower rates.
You should seek the mortgage insurance company that offers the most comprehensive guidance on the whole insurance procedure. Many home buyers fail to clarify on important factors such as rates, premiums, security interests and refinancing options, then find themselves paying huge amounts of money to own the house. Try as much as possible to build a close relationship with the mortgage expert assigned to you by the company so that you can get the best rates and package tailored for you.