Mortgage News : What is Mortgage Default Insurance?
The amount of money you save for the down payment will determine whether you will require mortgage default insurance.
If you have a down payment which equals 20% or more of the price of your home, you will qualify for a conventional mortgage and mortgage insurance will not be necessary.
If you have a down payment that is less than 20% of the price of your home, you will need to take a high-ratio mortgage as well as mortgage default insurance.
Mortgage default insurance provides the lender with the flexibility to offer you the same competitive interest rates available to homebuyers with a larger down payment.
It’s insurance, which guarantees the mortgage by protecting the lender should the homeowner be unable to continue their payments for some unforeseen reason.
Mortgage insurance premiums are paid once, but can also be added to the principal of the mortgage.