This week’s Question comes from a from Angela, a first time home buyer.
Q. Do I have to have Mortgage Insurance? Does this pay my home off if it’s damaged?
A. No, not everyone needs to have mortgage insurance, however if you are putting less than 20% down on a home and utilize government loan programs, you would be required to have mortgage insurance. As far as what it covers, well the short answer is nothing, for you. Mortgage insurance is a tool that is used to lower the losses that can be incurred by a lender in the event of a foreclosure. Many first-time buyers confuse mortgage insurance with hazard insurance. Hazard insurance protects you in the event of a physical loss or damage to your property. I could talk for hours and hours about the types, costs, and upfront vs. monthly premiums, but if you can have one take away this week, remember this important point that comes directly from the CFPB website:
Warning: Mortgage insurance, no matter what kind, protects the lender – not you – in the event that you fall behind on your payments. If you fall behind, your credit score may suffer and you can lose your home through foreclosure. – CFPB Sept. 25,2017.
Every situation is different, call or email Chris or Bob if you would like a personalized Tips and Tricks to Improve your Score with Little Effort, and keep those questions coming!
Chris Conlon firstname.lastname@example.org 704-609-5017
Bob Parm email@example.com 704-778-2603