Many people have no idea what mortgage insurance is. Do you? Mortgage Insurance is almost exactly, what an individual would expect it to be. It’s insurance that pays a mortgage in response to a specific life-altering event (unemployment, disability, or even death). The next logical question is: “Is it for me?” To answer that question we have to examine the cost of mortgage protection insurance versus the benefits.
The cost of Mortgage Insurance is not 100% cut and dry. Depending on which company you select to cover said mortgage. The average cost of an insured mortgage, though, runs between 1-2% of the total cost of the mortgage per year. Initially that may seem like a considerable sum, but it’s typically broken up over a 12 month payment plan that coincides with the repayment of the loan, and usually goes down after a few years. If an individual had a $125,000 loan, they could expect the monthly cost of their loan to be increased by $104-$208 per month.
If the cost of the insurance is more than an individual can afford then it provides little benefit, but the peace of mind in knowing that even death can’t deny your family their home very much so seems worth it.
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