Are you planning on purchasing a home? If so, you’ll need to know the difference between private mortgage insurance (PMI) and mortgage protection insurance.
Nothing is more exciting, and overwhelming than being a first time home buyer. While it’s a huge financial responsibility, there is nothing like owning your first family home and securing a long-running investment.
In order to protect your family, your financials, and your home, it’s important to purchase mortgage protection insurance. This is especially important if your family depends on your income because mortgage protection insurance will ensure that your loved ones:
- Can continue living in a mortgage-free house
- Won’t struggle financially in the event of your premature death, illness, or disability
- Will have peace of mind, knowing they’ll always have a roof over their heads
- Can spend your insurance funds in a manner that is beneficial to them
Flexible and Affordable Mortgage Protection Insurance
At AIME, we know just how important a family home is to the well-being and happiness of your loved ones. That’s why we’ve designed 20/20 Mortgage Life Insurance, a flexible, affordable, and transparent product that can be customized to suit your budget and unique needs.
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Private Mortgage Insurance vs Mortgage Protection Insurance
Many homeowners mistakenly believe that PMI (private mortgage insurance) and mortgage protection insurance is the same. However, there are key differences between the two, and if you are buying a home, it’s important to understand the distinction. It’s very common for homeowners to believe that PMI will cover their mortgage in the event that they die prematurely, lose their job, or become disabled, but this is not the case.
PMI is designed to protect the lender, not the homeowner. On the other hand, mortgage protection insurance will pay off your mortgage if you die prematurely, and cover your payments should you become critically ill or disabled.
What is Private Mortgage Insurance?
Private mortgage insurance will reimburse a mortgage lender if you default on your loan and your house’s value is not enough to repay the entire debt through a foreclosure sale. Remember, PMI has nothing to do with disability, death, or illness, and will not pay your mortgage if one of these things happen to you.
When is PMI required? If the downpayment on your home is less than 20%, then your lender will most likely ask you to get PMI.
When can you stop paying PMI? When you reach the point where the loan-to-value ratio is 80%, then you can contact your mortgage servicer and let them now that you would like to discontinue the PMI premiums.
How much does PMI cost? The cost of PMI will vary according to many factors, including your credit score, down-payment percentage, and borrowing amount. However, it will cost between 0.5% - 1% of your total amount per year.
What is Mortgage Protection Insurance?
Unlike PMI, mortgage protection insurance protects YOU, the borrower. Also unlike PMI, this type of insurance is purely voluntary, and many homeowners choose to purchase this product because it will typically:
- Pay off your mortgage in the event of your premature death
- Cover your mortgage payment for a certain period of time (if you become disabled or ill)
- Ensure that your loved ones will always have a roof over their heads.
Quick Facts About 20/20 Mortgage Protection Insurance
- Your family collects the cash benefits directly.
- Your mortgage protection policy is portable, meaning that if you switch lenders, you can keep your policy. However, you may want to get a policy review to ensure your current one still covers your needs.
- You have the option to add on extra coverage, in case you become disabled or critically ill.
- It’s very easy to apply for. It requires you to answer only a few simple questions and you won’t need to take a medical exam.
Call Today
To find out more about 20/20 Mortgage Protection Insurance, and how our products can help financially protect you and your loved ones, contact one of our licensed agents today at 1-844-974-2020 or fill in our online contact form.
