Today I want to talk about the importance of mortgage insurance and why you should be discussing it with your financial advisor. Even if you don’t yet have a mortgage, it’s important to know for when you do start looking, or to inform your loved ones of what can happen if your mortgage isn’t insured.
What is mortgage insurance?
Mortgage insurance is the bank’s version of life and disability insurance. If a person becomes sick, injured, or passes away, the insurance will pay the mortgage to the lender on behalf of the individual.
Why is it important to have?
If you pass away, do you want your insurance to pay loved ones or have that money taken away to pay off lenders? Mortgage insurance ensures that mortgages are paid so that loved ones can still receive those financial benefits.
It’s also important because the insurance isn’t portable. This means that if you decide to renew your mortgage with another lender, you now have to prequalify for your insurance with that new lender. If your health has declined since then, that could be a huge problem.
In most cases, you’re actually paying a higher premium with less benefits. I highly suggest watching “In Denial” from CBC Marketplace. The story goes into detail about mortgage insurance and some important things to look out for. If you have a mortgage or are looking to get one, it’s a must-watch.
Bottom line: talk to your financial advisor about mortgage insurance. Make sure you’re doing a needs analysis to make sure you’re seeing the big picture. Be informed and stay educated when it comes to mortgage insurance. It can make a difference between having nothing and having everything – make sure you’re covered when it comes to paying out lenders.
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