that my house is worth substantially less than I owe on it (underwater), should I go back and buy mortgage insurance anyway? It seems like the prudent thing to do since it might be several years before I would make anything if I sold it.
Maybe I was thinking of mortgage life insurance, which pays off th mortgage in case I die before it's paid off.
Anonymous
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No, no, no. Mortgage insurance is what the lender makes you pay in case you default on your loan. It does not protect the homeowner in any way. Mortgage insurance is usually required for home buyers who don't have enough money to make a decent down payment, and just barely enough to make the mortgage payments each month.
In other words, if someone buys a home with no little or minimal money as a down payment, and their income to expense ratio exceeds a certain percentage, the lender may fund your mortgage, but they are going to take out insurance so that if you don't make your payments, they will still get all their money back. Instead of them paying for that insurance, they charge you for it.
I don't know of any simpler way to explain this, but mortgage insurance has nothing to do with someone paying your mortgage for you. It has to do with the lender to whom you make your payments, so if you can't or don't or are not able to make your payments, they still get all their money back.
You suffer the consequences, they get their money, and you've paid for them to be able to do that.
What do you think all this economic reform has to do with?
reel tur
Mortgage insurance is a requirement from lenders if they are financing 80 percent or more of the mortgage as a protection for THEM. It is insurance for the lender in the event they have to foreclose on and sale your property and it helps them recover some of there lost, if you are not able to pay the mortgage.
StephenWeinstein
No. Mortgage insurance does not protect you. It protects the lender.
Anonymous
I don't think you understanding what mortgage insurance (PMI) is. It protects the lender, not the owner.
Anonymous
No.
That PMI insurance doesn't benefit you in any way, shape or form. Why in the world would you want to buy it? There really is absolutely NO benefit to you.