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)
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Useful Information on Mortgage Insurance Rates
A lender likes when the buyer puts down at least 20% towards the price of the home. They do not appreciate a high loan to value (LTV) ratio, certainly not one greater than 80%. This means that on a house appraised at $200,000, $40,000 is needed to put down before closing. If this is not possible, either the home cannot be purchased or mortgage insurance (PMI) needs to be purchased.
The purpose of mortgage insurance is to insure the bank or lender against the buyer not paying and perhaps going into foreclosure. The buyer is paying to insure the bank's risk in making the loan to someone who did not put down 20% of the purchase price of the home. If the buyer puts down at least 20%, the purchaser is said to have "skin in the game."
Mortgage insurance rates can run as high as 3%. That would entail a payment of $1,500 for a $200,000 home. In the past the entire PMI was paid at closing. It has since changed and the insurance will run for the length of the loan. This gives the homeowner an incentive to end the payments.
The PMI will be held in escrow. The amount will be added to other escrow items such as home insurance and taxes. when purchasing a home, these added costs must be considered along with the specific monthly mortgage payments.
If the homeowner puts more money into the home each month, the PMI can be stopped, when the equity in the home reaches 20%. If the house appreciates in price and the Loan to Value Ratio has gone down, the mortgage insurance can also be ended.
The buyer will have to take the initiative in ending the mortgage insurance. There is no incentive for the bank to remind you that the insurance can be ended. After all, they are still getting additional insurance that the homeowner is paying for.
Ryan writes numerous articles on obtaining mortgage protection cover and about the facts behind mortgage protection and its importance.
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