We’ll help you completely understand what mortgage insurance is and whether it will apply to you.
When you purchase a new home, there are three types of insurance that you’ll need to be familiar with – homeowners’ insurance, creditor insurance, and mortgage insurance. Here at the BRM Lending Team, we make sure you are informed about how these policies work, and in the case of mortgage insurance, we’ll help you avoid this added cost whenever possible.
Private mortgage insurance is designed to protect the lender or other title holder, not you. It protects them if you default on the mortgage but does not remove your liability and responsibility to repay the loan. Most lenders require you to pay the premium for private mortgage insurance if you have not put down at least 20% of the purchase price and those premiums continue until you have paid at least 20% of the principal balance. The problem is that it can take several years for that to happen and by then you may forget to request to cancel it, and most lenders won’t do it automatically.
Obviously, the best way to avoid private mortgage insurance is to meet the requisite 20% down payment. However, there are other solutions, such as having a piggyback loan for the portion of the down payment you don’t have or getting a private loan from family or friends to reach the 20% requirement. These aren’t always great options, however, and we’ll be certain to look at your financial goals to help you with the right advice for your situation.
If you have any questions about mortgage insurance or mortgages, don’t hesitate to contact us. We work for you to get you the best rate and terms so your home ownership in Collingwood, Ontario can be the dream you envision. Call today to learn more.