mortgage protection

The Key Advantages of Mortgage Protection Insurance

Have you signed the papers for your new home and are already feeling squeezed by the number of bills? Are you suddenly afraid of what will happen if you can’t make your mortgage payment each month?

Owning a home comes with new responsibilities, but that doesn’t mean you have to live with anxiety over these new challenges. 

Mortgage protection insurance provides the peace of mind homeowners and families need in the event of unforeseen life challenges. Read on to learn all about mortgage protection and if it’s the right choice for you! 

What is Mortgage Protection Insurance? 

Mortgage protection insurance (MPI) covers your entire monthly mortgage payment or a portion of it in the event that: 

  • You experience a long job loss
  • You become disabled
  • You pass away 

You’ll need to remember that the insurance will cover the principal and interest of your mortgage payment but not additional fees such as homeowner’s association dues. If you lose your job or suffer a disability, insurance policies typically payout for a year or two.

The rate of your mortgage protection insurance will depend on a number of factors, such as: 

  • Your age
  • Your health
  • Smoking status
  • Home value
  • Amount of regular payment
  • Length and amount left on the mortgage
  • Occupation industry

You can see how the rate of your insurance may not be feasible for you. If that’s the case, it’s important to focus on a financial strategy that takes into account your income, expenses, savings, and investments.

What is Private Mortgage Insurance?

People often get private mortgage insurance (PMI) confused with mortgage protection insurance (MPI). While mortgage protection insurance helps the homeowner in the event of a job loss, disability, or death, private mortgage insurance benefits the lender.

Lenders will often require you to purchase PMI if the down payment on your home is less than 20%. This protects the lender if you default on your loan but a foreclosure sale isn’t enough to repay all your debts.

It’s important that you discontinue your PMI payments as soon as you can, as they’re often about 1% of your loan amount.

Loan-to-Value

You’ll be able to discontinue payments when your loan-to-value ratio is at 80%. However, if you forget to request discontinuation, your lender has to automatically cancel it when the loan-to-value ratio is at 78%. 

Your loan-to-value ratio is calculated by dividing your current loan balance by the appraised value of your home. This will give you a decimal that’s converted into a percentage. 

Benefits of Mortgage Protection Insurance

Now that you know all about mortgage protection insurance, you may be wondering how paying extra each month can benefit you in the longterm. Here are a few benefits you can enjoy: 

Peace of Mind

The peace of mind that comes from purchasing insurance can’t be overstated. If you ever worry about your family having to make ends meet after you pass away or if you’re disabled, mortgage protection insurance can assuage those fears. Even if you lose your job and can’t find a new one for a long length of time, you won’t be able to fear your home being taken away from you. 

Guaranteed Acceptance

Mortgage protection insurance is a great choice if you have pre-existing conditions that make it harder to get life or disability insurance. Mortgage protection insurance has high acceptance rates because insurers have little reason to turn people down.

You won’t need to have medical exams or lab tests done before a decision is made. However, this means you may be paying more per month if you have a risky occupation or pre-existing medical conditions.

Simplicity

If you lose your job or become disabled, your mortgage protection insurance is simple to use. Your payment will automatically go to your lender for the exact balance; you won’t have to do any more work or handle the money yourself. 

Life Insurance

Paying off your mortgage insurance early also has benefits. You’ll be able to keep your coverage until your policy expires. Some policies even allow you to change your mortgage insurance into a life insurance policy. This is beneficial for homeowners who were trying to get a life insurance policy but couldn’t due to pre-existing conditions.

Keeping Families Afloat

Mortgage protection insurance can be a great investment for young families with children, especially if one spouse takes care of the kids during the day, and the other works full-time. When the main income-earner of the family passes away, families are often forced to sell their homes and relocate.

Investing in mortgage protection insurance will ensure that the family is taken care of in the event of a tragedy. 

Peace of Mind with Mortgage Protection Insurance

Mortgage protection insurance is a sound investment if you’re a young family or aren’t able to purchase life insurance due to pre-existing conditions. This kind of protection is necessary during times when you suffer a job loss, death, or disability.

Instead of worrying about whether you’re able to keep the roof over your head, you can instead focus on applying for more jobs, focusing on your health, and making time for your family. It’s important that you shop around before making a purchase so that you can find the best policy for you.

Life Insurance Quotes provides a quick and easy way for homeowners to compare multiple quotes all at once that are tailored for you.

All you need to do is choose lifestyle details, the coverage you need, and your contact information. Get a quote with us today! 

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