Home Insurance and Mortgage Insurance

By
Real Estate Broker/Owner with Morningside Homes, LLC 720-231-5200 DRE# ER300941
 
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Many homeowners with mortgages pay for both types of insurance but only one of them protects the owner.

Homeowner's insurance covers damage to your property and losses from fire, burglary, vandalism, and other named natural disasters.  When an insured has a loss, they file a claim with the insurance carrier which would be subject to the deductible mentioned in the policy.

If the homeowner has a mortgage on the property, the lender will require that the borrower carry adequate insurance on the property and name the lender as an additional insured.  This protects the lender that the home will continue to be sufficient collateral for the loan in case of a loss.

Mortgage insurance is not like homeowner's insurance in that it is solely for the protection of the lender if the borrower defaults on the loan.  Usually, lenders require mortgage insurance on any loan greater than 80% loan-to-value.  Occasionally, they may require it on some loans less than 80% based on their underwriting requirements and possibly, from anticipated risk from the borrower.

VA loans do not require mortgage insurance.  Conventional lenders must remove the mortgage insurance when the loan amortizes below the stated percentage.  FHA loans require mortgage insurance for the life of the loan.

When a property appreciates so that when the owners refinance, the loan-to-value ratio is less than 80%, no mortgage insurance would be required.  This can be a strong motivation for some owners to refinance to save the cost of the mortgage insurance.

Mortgage insurance premiums are not regulated by law like homeowner's insurance is in most states.  Most buyers are concerned about the interest rate on their mortgage, but few question the amount of the mortgage insurance premium.

The homeowner can select the carrier for his homeowner insurance, but the lender determines the carrier for the mortgage insurance.  When you are interviewing lenders, the type of insurance that will be required and the price of the mortgage insurance should be included in the discussion.

Posted by

Buy or Sell with Patty Clark              Denver/Aurora Co. and surrounding areas 

Chris and Patty

    Helping Families Move with Care

  If you would like to be sent properties on a daily or weekly  basis just call or email me and let me know your wants and needs. A match will be made with a home you love and with monthly payments you can afford. I specialize in first time home buyers and sellers who are

          ready to downsize or move to a larger home as the family grows

     

                                                     Morningside Homes, LLC

patty@morningsidehomes.com

www.morningsidehomes.com
Cell: 720-231-5200                       CRS,GRI,WCR,SFR,CNE, MRE

 

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