What is Mortgage Insurance?

Mortgage Insurance mitigates a lender’s risk if a borrower fails to meet payments. Borrowers typically pay recurring premiums when their initial stake (down payment) is below a threshold—like 20%. Should default occur, the insurer offsets outstanding debts, protecting the financier and possibly enabling more competitive terms initially.

• Loan Approval Aid: Helps those lacking significant down payments secure financing.
• Premium Types: Monthly or lump-sum, adjusted for loan size and occupant credit scores.
• Cancellation: Some can discontinue after building enough equity or achieving a set ratio.
• Financial Impact: Adds monthly costs but unlocks access to desired funding levels.

Mortgage insurance ensures lenders face fewer risks, allowing more flexible underwriting for borrowers while they gradually consolidate equity and aim to drop this added expense.