Jul 18 2011

What is mortgage insurance for?

Category: Real Estate

Answer:

Loan Insurance - Mortgage InsuranceMortgage insurance is a way for lenders to guarantee that they will be repaid in the event that a borrower can’t continue to make payments or defaults on the loan/mortgage. It gives the lender a way to prevent loss and is generally required on all loans where less than 20% has been put down by the borrower. Mortgage insurance also gives prospective home buyers the ability to afford a home without having to have a substantial down payment. It essentially fills the gap between the generally accepted 20% lending requirement and the actual amount the borrower can put down on a home. The recent real estate crisis took place due to lending practices that allowed for loans to be created for certain individuals without the required, traditional assets. Today, the mortgage industry has come back to fully verifying income and assets, regular loan products, and improved quality control and underwriting.


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