The housing market has been a mess for quite some time now. Prices have plummeted, and there’s a lot of uncertainty in the air. This has led to a lot of people looking for ways to secure their homes before the market crashes even further. One way to do this is by purchasing private mortgage insurance.
However, many people are unclear about whether or not they can buy it. That’s why we’re here to help. In this blog post, we will explore whether or not you can buy private mortgage insurance, as well as some of the benefits and drawbacks of doing so. Keep reading to learn everything you need to know before making your decision.
Pros and Cons of Buying Mortgage Insurance
Mortgage insurance can be a cost-effective way to protect your home from potential loss in the event of a loan default. However, there are some important pros and cons to consider before buying this coverage.
Pros of Buying Mortgage Insurance
1. Mortgage insurance can help reduce your risk of losing your home in the event of a loan default.
2. Mortgage insurance premiums typically have low annual fees, so they’re an affordable way to protect your home.
3. You can buy mortgage insurance even if you don’t have a loan with a participating lender.
4. The coverage provided by mortgage insurance typically lasts for several years, so it’s a long-term solution to protecting your home investment.
5. If you sell or refinance your home in the future, you may still be able to reclaim any money paid for mortgage insurance premiums if you meet certain conditions (such as having made required payments on time).
When to Buy Mortgage Insurance
There are a few things to keep in mind before you buy private mortgage insurance. The first is that it’s an expensive add-on, typically costing around 0.5% of the loan value.
The second is that the policy only covers defaults on loans with a minimum downpayment of 3%. So if you’re using a home equity line of credit or another type of low-downpayment loan, you won’t be able to use PMI.
Finally, make sure you understand your policy’s exclusions. For example, PMI won’t help protect against default on a loan if the property has been resold within two years of being bought.
How Much Mortgage Insurance to Buy
If you have good credit and a low down payment, you may be able to buy private mortgage insurance. This insurance protects the lender in case you cannot pay your mortgage. You can usually buy this insurance after you have already signed a loan agreement.
Conclusion
You may be wondering if you can buy private mortgage insurance. The answer is yes, but it’s not always a good idea. Before you buy private mortgage insurance, make sure that it’s the right solution for your situation and understand all of the risks involved.