Mortgage Insurance
Mortgage insurance is a type of insurance that protects lenders when borrowers have a down payment of less than 20% of a home's value. If the borrower defaults on the loan, the insurance compensates the lender for losses. This allows individuals to qualify for a mortgage with a smaller down payment, making homeownership more accessible. Borrowers typically pay for this insurance as part of their monthly mortgage payments or as a one-time upfront fee. Mortgage insurance is not the same as home insurance, which covers property damage and personal liability.
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Mortgage insurance is a protection policy that lenders require when homebuyers make a down payment of less than 20% of a home's purchase price. It safeguards the lender in case the borrower defaults on the loan. This insurance can be paid as a monthly premium or as a one-time upfront charge. While it adds to the overall cost of the mortgage, it allows buyers to secure a loan with a lower down payment, making homeownership more accessible. Once the borrower builds enough equity, they may be able to cancel the mortgage insurance.