| A smart lender or Loan Officer will tell you that Mortgage Insurance (MI) allows you to borrow more than 80% of the market value of a home. What this in fact means is that MI does absolutely nothing for you in terms of insuring you from losses. MI is meant to protect the lender from loss should you, the client, default on your mortgage. The MI Company shares the risk of loss with the lender and compensates the lender should you default on your loan. In short you do not receive any benefit (outside of being able to borrow at a higher ratio on your mortgage) from MI (Mortgage Insurance). During the mortgage meltdown MI companies like AIG where not able to cover the losses of lenders. The result was a mortgage crash and heavy losses (mortgage meltdown). A small handful of lenders and brokers, such as the one for which I hang my own mortgage license with, have found a way for the client to benefit from MI; which makes sense being that the client is the one paying for it. How is this you may ask yourself, it is simple. We have included an 'Employment Insurance' policy in the MI (Mortgage Insurance). Many foreclosures happen when the borrower loses his/her job and foreclosures are expensive for a lender. By protecting the borrower we are actually cutting cost and bettering our default ratio which allows us to get more on our notes in the secondary market. This savings pays for the policy and allows the lender to pass additional savings down to the borrower. How it works: • The benefit is up to $2000.00 per month. • Up to 3 monthly payments per job loss occurrence, with a maximum of 6 payments during the benefit period. • The benefit is paid up to 3 years after the loan closes while the mortgage insurance policy remains in place. How it helps the client: • Helps protect credit by keeping up with your mortgage payments. • Safeguards the investment made in your home. • Makes emergency funds go further. • Provides some peace of mind during the stress of unemployment. The draw back - You can only obtain this type of MI in a new mortgage; refinance or purchase. We are in a time where the mortgage industry has gone through a great amount of change in a fairly short period of time. I have been in the mortgage industry for over 9 years and I am a firm believer that you must make your mortgage work for you. Small changes in your note or terms can have big impacts on your life as time moves on. Some of these changes can be bad and some, like this one, can be very good. Always cover your bases, especially if it is at no cost to you. Samuel Morales Mortgage Expert http://www.yourloanofficer4life.com samuel@yourloanofficer4life.com NMLS: 295626 (Licensed in TX only) Article Source: http://EzineArticles.com/?expert=Samuel_Morales |
Friday, July 29, 2011
Mortgage Insurance - What's best?
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