Mortgage Insurance Simple Answers: Part 1
December 15, 2007 | Brian Lebars
What is Mortgage Insurance?
Mortgage Insurance helps borrowers (majority first time home buyers)realize the dream of Homeownership sooner by enabling them to purchase a home with less than a 20% down payment. Mortgage insurance provides financial protection for lenders and investors if a homebuyer defaults on a mortgage loan.
With this protection, lenders can offer more low down payment mortgages to homebuyers – with as little as 5%, 3%, or even no money down instead of the traditional 20%.What are the Benefits of MI?
The benefits of mortgage insurance are numerous. Mortgage insurance can help a homebuyer qualify for a home with a lower down payment, buy the home sooner, stop paying rent faster, and claim more tax-deductions. Of course, buying a home sooner accelerates building equity and longer-term benefits of homeownership. Even if the homebuyer can make a 20% or more down payment, using mortgage insurance to put less money down potentially makes money available for investments, home improvements, vacations or education.
Additionally, a loan with mortgage insurance offers:
· Competitive Monthly Payments – now as affordable as or cheaper than most combo loans
· Predictability – payments aren’t rate sensitive like many exotic or combination loans
· Tax Deductibility* – Mortgage Insurance is now tax deductible!
· Cancelability – as soon as the loan-to-value and lender requirements are met
· Simplicity – one loan instead of two
Part 2: Is Mortgage Insurence Tax Deductable
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Mortgage Life Insurance refers to an insurance policy that guarantees repayment of a mortgage loan in the event of death or, possibly, disability of the mortgagor. Mortgage insurance protects the lender against loss in the event that the borrower defaults. The borrower pays the premium, but the lender receives the protection.
[...] Part 1 of Is Mortgage Insurance Tax Deductible I went over the purpose of First time home buyers utilizing [...]
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Real estate is and always the very best means of acquiring and preserving wealth. Real estate is versatile, can be customized to fit any objective and is capable of yielding steady and multiple streams of passive income.