Types of Mortgage Insurance
Mortgage insurance is just like any other type of insurance you may buy, it will cover you if something goes wrong. Just like insurance for your television may cover you if it breaks, mortgage insurance will protect your mortgage should anything go wrong with you, such as you loosing your job or you face financial difficulty. Mortgage insurance will act as a lifeline should you need it, and it will cover your mortgage payments until you are back on your feet again. Mortgage insurance could mean the difference between you loosing your home or keeping it safe.
Choosing which type of mortgage insurance is no easy thing though, and providers will often make the policies quite tricky to understand. Unlike your mortgage, you do not have to purchase the insurance from a lender, you can go to special providers and see which one offers the best deal. Some lenders may want you to take out theirs, or a mortgage broker may have special connections with a provider and encourage you to take out one of their policies, but you don’t have to do this. There are an increasing number of providers coming to the market, and a lot of these are internet based, so it is worthwhile taking your time to discover your options.
Different Types of InsuranceMortgage insurance will normally be refereed to as Mortgage Payment Protection Insurance and will come in all sorts of different forms. Depending on how much you want to pay, you can get the insurance to cover you for as long as you think will be necessary. For example, it could cover you if you miss one payment, or could cover you for more. You can pay for this type of insurance on a monthly basis along with your mortgage payment if you like. One option would be to take out what is known as Single Premium Payment Protection Insurance. This means that you will pay one lump sum, which will be added to the total cost of your mortgage, making your overall mortgage payment higher, but also meaning that your monthly payments could be lower because the cost will be spread out.
When it comes to taking out your chosen insurance, you should always check with the provider how you go about canceling the policy. You may decide that your situation is stable after a few months of paying the policy and decide that you no longer need it. A few of the policies can be very hard to get out of once you have signed up to them, and in some cases, you may find it hard to get a refund, if one is due. It is important with mortgage insurance that you always read the small print and make sure you know how you can cancel the policy. Certain types of mortgage insurance have received bad press in the past for not being transparent when it comes to how you can cancel the policy, so it is important you know how to cancel yours.
Whether to take out mortgage insurance or not is a personal choice, it has its benefits, but it is also an extra cost. Whichever you decide you will in some way be taking a risk, so it’s worth sitting down and weighing up the pros and cons of taking out insurance.