Mortgage insurance is designed for two things: getting you the loan you need and protecting your lender.
If you’re looking for a home for your family, but don’t have all the money you need to purchase it, mortgage insurance comes into play.
You may not be making the full 20 percent down payment on the house, or you may not have the credit or job history necessary to qualify for a standard home loan. In these cases, you’ll be required to pay for mortgage insurance
What You Need to Know About Mortgage insurance
Mortgage insurance is typically factored into your monthly payments on the home loan. It’s a great tool that allows you, or people like you who wouldn’t normally qualify for a home loan, to get the money they need for the houses they want. It is designed to ensure lenders do not discriminate and that all buyers get a fighting chance when it comes to purchasing a home.
At the same time, lenders are also entitled to some protection. Lenders have a right to know that if you’re unable to make the payments on the house in the future, or if you default in any way, they’re still going to get their money’s worth. In this sense, mortgage insurance provides the lender with a standard guarantee that if you ever default on your loan beyond a certain period, the bank or lending institution has a right to foreclose your home and reclaim the property.
Though it’s included in your monthly payment, mortgage insurance is also likely to increase what you owe.
When Is It Required?
Mortgage insurance is required if your down payment is less than the standard 20 percent. It is typically applied to several different types of loans, though conventional and FHA are the two most common types.
If you’re getting a conventional loan, the lender will probably garner mortgage insurance through a private or third party. If you’re getting a Federal Housing Administration (FHA) loan, the mortgage insurance could be more expensive than if you were to get a conventional loan, and you’ll be making your payments directly to the Federal Housing Administration.
With FHA loans, an upfront fee will be required for mortgage insurance. If you cannot afford this fee, an option exists that allows you to include the fee in your loan payments.
Looking for a Mortgage Lender in Kansas City?
Have you found the perfect home and you’re looking for a mortgage lender in Kansas City? If so, give us a call. We are A1 Mortgage, and for years, we’ve been working hard to ensure people like you get the money they need to afford the home of their dreams.
Get in touch with one of our qualified reps for an estimate. We look forward to helping you.