Mortgage insurance protects a lender from homeowners who
default on their loans. Homeowners pay mortgage insurance each month, while
also paying interest and paying off part of the principal on the home mortgage.
Although it may not cover all the costs associated with unpaid mortgage funds
and processing a foreclosure, mortgage insurance helps distribute the risk more
evenly to both the insurance provider and the mortgage lender. In cases where a
homeowner makes timely mortgage payments, only the insurance provider profits
from mortgage insurance. With 20% down on your purchase, mortgage insurance
will not be required. Another way to avoid mortgage insurance is for the
homeowner to get a loan for less than 80% of the value and a second mortgage
for the balance of the total amount needed to purchase the home. Second
mortgages typically have higher interest rates than a first mortgage, but they
can still cost less than paying for mortgage insurance in some cases. Call
Consumer Mortgage at 757-552-7000 or 1-800-882-0066 for professional advice on
your next purchase.
