All About Mortgage Insurance: January 2010

Mortgage insurance is defined as a decreasing term life insurance depending to the amortization of the mortgage period while the premium remains the same over that period. You can purchase the mortgage insurance from the bank, trust or life insurance companies.
1. If you purchase your mortgage insurance from the bank or trust
a) No medical exam is required
b) The beneficiary of the policy is the bank or trust
2. if you purchase your mortgage insurance from the life insurance companies
a) medical exam is required for any sum insured over $100,000
b) The beneficiary of the policy is designated by you ( Kyle J. Norton)

Pros and Cons of Mortgage Life Insurance

By Denise M

Mortgage life insurance is a type of insurance wherein the policy holder is able to clear mortgage liabilities in the event of the untimely death of the insured. In such a case, death benefits are equivalent to the outstanding balance on the loan. Quite clearly, this security gives tremendous peace of mind that no matter what, despite the worst case scenario, your family will always have a home to live in. Apart from that, many insurance policies offer optional provisions which include coverage for critical illness. With this option, the insurance company will pay out the outstanding loan in case you qualify conditions for terminal illness.

However, it is vital to examine the pros and cons of mortgage insurance before you make up your mind about purchasing a mortgage insurance policy. One of the major advantages of mortgage life insurance is that it is easy to obtain. In these days of uncertainty and insecurity, it may make sense to opt for a mortgage insurance policy to make sure your loved ones have a home to stay in, even if, anything were to happen to you.

Here are some advantages and disadvantages of a mortgage life policy to help you make an informed decision:

Advantages of Mortgage life insurance

Guarantees clearing your mortgage payment: The death benefit of mortgage life insurance pays off the outstanding balance on your mortgage, and thereby guarantees a home for your family in case of your death. What is also important to note is that, unlike a regular life insurance policy, death benefits from a mortgage insurance policy is not paid to your loved ones but goes directly to the mortgage company towards the payment of your outstanding mortgage. This is useful to ensure that death benefits are used primarily for the purpose of clearing off the mortgage.
Health qualifications for a Mortgage Insurance are considerably lower than qualifying for a regular life insurance policy: The health standard to meet to buy mortgage insurance is much lower than a regular term insurance policy. If you are in bad health then a regular life insurance policy may require you to pay higher premiums. If you suffer from severe health impairments, you may not even qualify for regular life insurance. In such cases, mortgage lifeinsurance is a very viable option for you. It gives you peace of mind by allowing you to get coverage for what is probably your biggest liability-your home.
Financial help during terminal illness: Mortgage life insurance policies may provide protection coverage in case of terminal illness, provided, your mortgage insurance includes terminal illness benefits and you opt for it. This indeed comes as great savior for the policy holder who contracts a terminal illness and can no longer work or earn money to pay the monthly mortgage. In such cases, the mortgage life insurance company will provide accelerated death benefits to pay off the mortgage.

Disadvantages of Mortgage Life insurance:

No payout until the stipulated time period is passed: Regardless of the situation there is no payout within the first six months of the policy. So in case any calamity strikes the insured before the stipulated time, the insured will not receive anything.
Mortgage life insurance coverage decreases with time: In case of your death, the amount of cover will depend on the term of insurance, which decreases more or less in line with the amount outstanding on your mortgage. As a result, you end up paying more for less coverage over the years. That essentially means by the end of the plan, there will be no benefits if you outlive the policy.
Excludes any Pre-existing medical condition: Any pre-existing medical conditions (terminal or otherwise) before the investment are excluded in the policy. Therefore, such conditions cannot be claimed if the situation arises.
Fixed monthly premiums Although insurance cover reduces with time the monthly premiums still remain fixed throughout the life of the policy.

AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term life insurance as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurance rates by comparing thousands of life insurance policies from dozens of top-rated carriers.

Article Source: http://EzineArticles.com/?expert=Denise_M

Pros and Cons of an Option Arm Mortgage

By John Hurlbut

An Option ARM (adjustable rate mortgage) or pick-a-payment mortgage is the most versatile type of mortgage a homeowner can choose. These loans are very attractive to borrowers looking for an affordable monthly payment option or borrowers with a fluctuating monthly income; these loans are also sometimes called cash flow arms. The borrower who chooses this type of loan has four payment options they can choose from each month.

Option one is commonly known as a negative amortization payment. This is traditionally a very low payment offered at an initial teaser rate for the first year (between 1% and 2%) and thereafter tied to an index such as the COFI (Cost of Funds Index), the CODI (Cost of Deposit Index), or the COSI (Cost of Savings Index). This option allows for the principal of the loan to grow or negatively amortize. For example if the borrower pays the initial payment, say $1000, a month and the interest only payment (usually option two) is $1500 per month the difference between the two, $500, is added to the principal of the loan. Savvy borrowers closely monitor the level of negative amortization that they allow to accrue. If the amount of the principal reaches 110% of the original principal balance the loan is then recast and the borrower looses the choice of option one.
Option two is commonly known as an interest only payment. When the borrower chooses this option only the interest owed on the loan is paid. With this option a borrower's principal remains the same. Option two is normally no longer an option after seven years. This is because most or all of the interest due on a loan amortized over 30 years is paid off in the first seven years.

Option three is a standard 30 year amortized payment. This option allows for a small amount of principal as well as all the interest on a mortgage to be paid monthly. If a borrower makes one 30 year amortized payment a year an option arm will not be recast. The third option is the one most borrowers make and is usually carries a relatively fixed rate. The rate is determined by an margin (the bank's profit) added to the index to which the loan is tied.

Option four is the quickest way to pay off a mortgage. This option is based on a 15 year amortization schedule. While the most costly of the four options it is the option that saves the most money in the end. When borrowers choose a 15 year amortization for their loan they can save tens of thousands of dollars in interest.

An option arm is a very versatile loan. Borrowers should be sure to realize that the first option is a teaser rate, set for a fixed amount of time, and the initial payment will fluctuate after the first year. Smart borrowers should qualify for the 30 year payment, try to make the 15 year payment, and exercise the option for a lower payment only if cash is needed.

For more information on Mortgage Loans, please go to http://www.nicehousesite.com/ and get your FREE REPORT On Private Mortgage Insurance, what it is and why it's so important! Also, many good articles on Mortgages, Creditors, Brokers, Deeds of Trust, everything you must know to get a Mortgage in today's market.
Thank you, John Hurlbut

Article Source: http://EzineArticles.com/?expert=John_Hurlbut

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All About Private Mortgage Insurance - PMI

By Ron Beauchamp

Making mortgage loans can be a risky business. As with all businesses, lenders are looking for assurance that their investments will be protected. However, it's not always easy to predict which borrowers will default on their mortgages or eventually go into foreclosure. Because of this, lenders require that the borrower pay for Private Mortgage Insurance under certain circumstances.

What Does PMI Do? Private Mortgage Insurance protects lenders in the event that the borrower does not repay the loan. Instead of the lender losing the money, the insurance company will step in and cover the losses. Typically, PMI only covers the difference between the home's value and the remaining balance on the mortgage, as the lender can recoup the remainder through sale of the home.

Who Needs PMI? Typically, lenders will require PMI on loans with a loan-to-value of over 80%. In plain English, if the home is worth $100,000 and the loan is for more than $80,000, the lender will require private mortgage insurance. PMI can be canceled when the borrower no longer owes more than 80% of the home's value.

Why Offer It? It would be much safer for lenders to only accept borrowers that can make a 20% or more down payment, but that would significantly lower the number of individuals that are able to purchase a home. Instead, PMI protects the lenders just as if the borrow had made the full 20% down payment, of course, it is an additional expense to the borrower.

How Much Does It Cost? Although the cost can vary depending on the amount of coverage provided (1-20% of the home's value) and the type of loan it covers, it is typically around $35-$70 per month on a $100,000 mortgage.

Find a great Cupertino Mortgage Loan at LoanPickr.com and get a quote on a California Mortgage Loan.

Article Source: http://EzineArticles.com/?expert=Ron_Beauchamp

FHA Loans

By Max Fischer

During the recent economic crisis, credit markets dried up and mortgages became difficult to obtain, especially for people with poor credit. Yet millions of Americans still want to achieve the dream of owning their own home. For homebuyers with a low credit rating, it can be difficult to figure out the best option; no one wants to get ripped off by a mortgage or loan scam. Fortunately, the federal government offers programs to obtain FHA loans that can help people with shaky credit to purchase a home or condominium.

What are FHA Loans?
Here is a brief overview of the FHA. In 1934, during the Great Depression, the U.S. Congress created the Federal Housing Administration (FHA). The purpose was to stimulate home construction, reduce unemployment, and offer loan insurance programs designed to provide affordable housing for people who would otherwise be unable to purchase a home. In 1965 the FHA was incorporated into of the Department of Housing and Urban Development's (HUD) Office of Housing. Today, the FHA assists homebuyers by providing mortgage insurance on loans made by lenders throughout the United States and its territories.

The FHA does not make loans. It does not build, buy, or sell houses. If you are buying a house or condominium, you do not apply directly to the FHA for a loan. You apply through an FHA approved mortgage lender such as a bank.

What does the FHA do? The FHA helps homebuyers who meet FHA loan guidelines by insuring their mortgages against default. FHA mortgage insurance provides the lender with protection against losses, and the lender bears less risk because if the homeowner defaults, FHA will pay a claim to the lender. This insurance, by reducing the lender's risk exposure, means lenders can approve mortgages for people who may otherwise have trouble getting a mortgage.

For the homebuyer with bad credit, the basic steps are these:

Apply to a FHA approved lender such as a bank or mortgage company.
The lender may ask that you apply for FHA mortgage insurance. Or, you may request that you be considered for FHA mortgage insurance.
To qualify for insurance, loans must meet established FHA loan guidelines.
The FHA investigates your finances and, if the risk is deemed favorable, insures the lending institution against loss of principal in case you fail to pay your mortgage.
If you meet FHA loan guidelines and are approved, you pay an insurance premium (generally one half of one percent) on the balance owed.

What makes FHA Loans Attractive?

With FHA mortgage insurance, the borrower receives several benefits:

A home appraisal by an FHA inspector
A lower interest rate on the mortgage than the lender might have offered without FHA mortgage protection.
The borrower is eligible for up to 96.5% financing, which means that down payments can be as low as 3.5% of the purchase price.
The borrower is able to fold the mortgage insurance premium into the mortgage.
FHA rules put limits on many of the fees that lenders charge in making a mortgage.

FHA Programs
There are a variety of FHA programs, the four below are basic FHA programs that can assist buyers who have poor credit.

Mortgage Insurance for One-to-Four Family Homes (Section 203(b)). This program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified buyers. This program may be used to finance the purchase of new or existing one-to-four family housing, as well as to refinance a mortgage.
Single-Family Rehabilitation Mortgage Insurance (Section 203(k)). This program allows the borrower to get just one mortgage loan, at either a long-term fixed or adjustable rate, to finance both the purchase and the rehabilitation of the property.
Single-Family Mortgage Insurance for Condominium Units (Section 234(c)). This program insures a loan to purchase a unit in a condominium building.
Insurance for Adjustable Rate Mortgages (Section 251). This program insures home purchase or refinancing loans that have adjustable interest rates.

If you have poor credit and meet the FHA loan guidelines, you may benefit from an FHA loan. It's worth investigating.

ConsumerFinanceReport.com features an extensive library of articles providing information, commentary, and guidance on a variety of personal finance topics, such as FHA loans. To view more articles that educate you on how to pay off debt, please visit our site.

Article Source: http://EzineArticles.com/?expert=Max_Fischer

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All About Mortgage Insurance

Wednesday, January 27, 2010

Update Jan. 27 - 2010 All About "Mortgage Insurance" Information By Insurance Experts

Friday, January 8, 2010

Update Jan. 08 - 2010 All About "Mortgage Insurance" Information By Insurance Experts

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