Understanding Mortgage Protection Insurance

Top five reasons to get mortgage protection-like now!

1. We’re all gonna die. That whole death and taxes thing is true. Knowing this, count on a mortgage life protection policy. Mortgage protection pays off your mortgage when you shuffle off this mortal coil. True, you don’t get to enjoy living mortgage-free, but your newly widowed spouse will, or your kids, or whoever you’ve left the house to. This life protection does not make a payout to your estate; it simply pays off your mortgage. You can have the protection payment rolled into your mortgage payment, or choose to pay separately. Your age is a major factor when determining premiums.

2. Potential lenders know you’re going to die too. They’ll feel a whole lot better about lending you money if they know they will get paid if you die. While your house could be sold to settle your estate, lenders really don’t want to wait for it to sell, or gamble that the house will sell for the full mortgage amount. Most lenders insist on life protection on a mortgage.

3. People with mortgage protection rate. That is, they get a better rate. Because mortgage protection reduces the risk to a lender, they are willing to give you a better mortgage rate. This can save you some big bucks over the long term. Speaking of rates, shop around. If you have less than twenty percent for a down payment, lenders will want you to buy private mortgage insurance (PMI). Buying mortgage protection that’s rolled into your mortgage is rarely a good buy. A stand-alone mortgage protection package is most often your best deal.

4. You’re sick! Well, you could get sick. Or wipe out on your Ninja. Additional mortgage protection is available in the event you have an accident or become seriously ill. This mortgage protection will cover your mortgage payments until you recover. Check the details; some start paying out after 30 days of continuous illness or disability, other’s can be as much as 90 days. Also check how long they’ll pay out for; some are twelve months, or for a higher premium you can get twenty-four mortgage payments covered.

5. The world might end (well-you could lose your job.) Today’s economy is less than solid; think AIG, Merrill Lynch, etc. No one’s job is truly secure anymore. Employment mortgage protection is a great way to stop the sheriff knocking at your door with an eviction notice. Again, watch that fine print: How long after you get the sack does coverage begin? How long can you stay home playing Halo before they stop covering your monthly payment?

Even if you already have mortgage protection, it’s a good idea to review it every five years or so. You may need additional coverage to cover extensions of the term of your mortgage, penalties incurred, etc. And don’t forget to pay your premiums. If you go into arrears, the policy may lapse and all that cash you paid will be for nothing. The Council of Mortgage Lenders estimates about 45,000 homeowners will have their homes repossessed by the end of 2008. Don’t be one of them!