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Why would I want mortgage insurance?
Home » Real Estate » Mortgage Insurance » Why would I want mortgage insurance?It might not be a matter of whether you want mortgage insurance or not. If you have a conventional mortgage and can't make a twenty percent down payment, you'll have to accept mortgage insurance. FHA and VA mortgages have a separate type of mortgage insurance, but it's also required. It's not all doom and gloom, however, mortgage insurance definitely has its benefits.
With mortgage insurance, you can dramatically reduce the amount of money you need for a down payment. Instead of a down payment of twenty percent, you'll only need to come up with five to ten percent of your total loan. Thus, you're able to buy a home sooner, and you can stop paying rent and start enjoying all the benfits (tax and otherwise) of home ownership. First time homeowners in particular benefit from the option of a low down payment.
In addition, mortgage insurance increases your buying power. Imagine, for example, that you have $10,000 for a down payment on a house. If you refuse mortgage insurance, your maximum loan will be $50,000, but if you accept mortgage insurance, you can look at houses in the $100,000 range. If you buy a home for $80,000, you can make a slightly bigger down payment, or you can take the $2,000 and spend it on moving costs or other expenses.
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