As we all know, buying a home is one of the most important transactions you will ever make. You’ve found your dream home and have bought home insurance to cover your property and legal liability. So now, all you have left to do is unpack your boxes and settle in. Not so fast!
Getting insurance for your mortgage
What would happen if your spouse were to pass away suddenly? Would you be able to cover your mortgage payments and your expenses? Mortgage insurance enables you to pay back all or a portion of your financial obligations in the event of death. Thus, you can focus on your family without worrying about money.
These days, you can buy mortgage insurance from a bank when signing your mortgage or you can buy it from a financial institution. To help you decide, here are the advantages of buying your mortgage insurance from a financial institution:
You own the contract and choose your beneficiaries
When you buy mortgage insurance from your bank, the bank owns the contract and is the beneficiary. If you buy your mortgage insurance from an insurance company, you own the contract and can name any beneficiary you want. Your beneficiary can choose to repay the loan, pay his or her debts or use the benefit for something else.
Your premium is fixed and guaranteed
The amount of mortgage insurance coverage you buy from an insurance company will remain the same for the duration of the loan… Example, you have a $200,000 mortgage and buy $200,000 in coverage that you will keep year after year. At a bank, the amount of your mortgage insurance coverage will decrease as the balance of your mortgage decreases while your premium will remain the same.
You can convert your mortgage insurance
An insurance company will allow you to convert your mortgage insurance to permanent life insurance, as needed, throughout the term of your loan. If you do convert your insurance, your premium will not increase and you will not have to undergo a medical exam. The policy will remain in force until your death.
All your insurance contracts in one place
Link all your creditor insurance contracts to the same policy. Make only one insurance payment for your auto, home, mortgage loan, line of credit, recreational vehicle coverage and more. This is a great way to make your life easier!
No more shopping around
By buying your mortgage insurance from an insurance company, you won’t have to shop around for mortgage insurance for the duration of the term. Additionally, the cost will not increase over the years. If you buy from a bank, you are required to negotiate new mortgage insurance and your premium will be higher based on your age and any changes to your health in the meantime.