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How Do PMI and Mortgage Life Insurance Compare?
Question: What is the difference between private mortgage insurance and mortgage life insurance?
Answer: A. In terms of real estate, when we talk generally of "private mortgage insurance" what we mean is a situation where insurance is used to secure financing when a 20 percent down payment is not available. In other words, the insurance is there in lieu of cash from a borrower. If the property is foreclosed, the insurance will protect the lender against losses. "Mortgage life insurance" is a different product. It will pay off the remaining loan balance to the lender or owner (usually the former) if a borrower dies for reasons covered by the policy. This type of insurance may not be available because of an existing health condition, but you do not need it to obtain financing. Also, be aware that mortgage life insurance pays out less and less over time because the loan amount falls with each payment. For details, contact a local insurance broker.
© 1997 Peter G. Miller. All Rights Reserved.
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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