Almost everyone has a mortgage on their home and that’s normal. In fact, even if you do have the cash to make payments, you would prefer to take a mortgage to buy a home as it does make sense financially and legally as well. the monthly payments reduce your financial load, contribute to your income tax and generally are an effective way to establish your credit history. At the end of the mortgage, you own your home free and clear. However, what if you have problems with the mortgage and you cannot make monthly or yearly payments. With this shaky economy, there is very good chance that sometime or the other, you may find finances tight and you will find it difficult to pay your mortgage. Does that mean you lose your house and everything you have worked for? Do you lose your dream home and do you have to work double hard to start over from scratch?
Taking Mortgage Protection Insurance Could Be Useful
Mortgage Protection Insurance plays a very simple role. In case you cannot make your monthly or yearly mortgage payments, the insurance kicks in and covers the payments for a limited time. The plan will usually cover your policy payments for a set period of time if you fall ill and cannot make payments, if you are sick and injured and cannot work and if you lose your job due to unforeseen reasons. With the Mortgage Protection Insurance covering your payments during this period, you can continue your daily life without having to worry about losing your home. This plan and protection process is also useful if your job is already shaky. Sometimes, the mortgage protection will also protect you in case you have other major expenses kicking in like emergency medical treatments and financial strain. The protection will ensure that payments are made in time to the mortgage owner ensuring a protected home.
How Does The Insurance Work?
The process is simple. Usually, when you take the mortgage from the primary lender, the same company also offers Mortgage Protection Insurance. However, you do have the choice of taking on the insurance policy from another company rather than the same lender. You can do this by comparing rates through an online mortgage calculator and then buy the most affordable mortgage insurance from the right provider. You can buy the insurance policy by first determining how much you are paying towards the home. All MIP policies cover the balance of payment to be made and some policies may promise as much as 125% of the pending balance left on the policy. This is good but you will have to pay more for this protection. As a result, your next step will be to determine how much you are willing to pay towards this policy. Cheaper plans will cover your completely but they have a bigger excess period as compared to an expensive plan. This longer excess period means that you will have to wait for a longer period of time before the lender can confirm that you have lost your financial income and cannot afford to make payments on time. In the end, cheaper policy means a longer time before the policy starts paying and vice versa.
Selecting a mortgage insurance policy;
- Step 1
Pick a service provider or pick several service providers and compare rates on the mortgage insurance policy to find a good company. Different policies have varied rates and deals and comparison is necessary to ensure that you have made the right choice.
- Step 2
Request a plan and discuss how the plan works. In order for the service provider to provide a quote, they require a few of your personal details like your personal information, your income per month and the monthly payments you make.
- Step 3
Select the right policy. Once you have these details, you can easily choose the right policy for your requirements. For example, a cheaper policy means that it will take a long time for the policy to start paying out. You need to have money saved up to cover payments in this case. In case of an expensive policy, the policy will start faster and it will cover your payments for anywhere from 12 months to 24 months. You can alter factors in the policy by changing payments, payout times, payout periods etc.
Making A Claim
Now that you know how to choose a policy and pay for it, you should also know that claiming the mortgage insurance is quite easy. All you have to do is verify that your income has stopped and the insurance provider will kick in to cover your mortgage payments. Once your financial condition is proved, the insurance provider will then make payments directly to your mortgage company.
In The End…
You cannot foretell the future and anything can happen at any time. It’s a far better idea to take the mortgage protection insurance and protect your home and loved ones instead of taking a risk. It will protect you during hard time and even allow you to get back on your feet financially. Take the mortgage insurance when it is offered through your lender or get in touch with a broker who will get a good deal on it. You have nothing to lose even with life insurance and everything to gain.