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Of Prime Interest: Mortgage insurance should not be ignored
There are many reasons to seek out the options regarding the importance of purchasing life and disability insurance for your mortgage.
Many homeowners are reluctant to purchase life and disability insurance—they don’t want to add the cost of insurance to their mortgage payments.
But one of the biggest mistakes you can make is to sign a mortgage agreement and decline the insurance coverage thinking you will research it on your own.
It’s not surprising that homeowners balk at mortgage insurance as most of us feel we are already stretching our monthly payments to the maximum.
But think of it instead as something you can’t afford to be without.
Your family could be left holding a debt on what tends to be a person’s largest individual debt obligation.
It is especially important for first-time or young buyers to get coverage because the mortgage balance is usually high and the premiums in most cases tend to be much lower because of their age.
The ideal time to look at your options is when you sign a mortgage agreement.
While all lenders offer mortgage life insurance, independent brokers tend to have more options.
And this affords you the opportunity of switching lenders later on. As an example, five years down the road your mortgage becomes available for renewal and another lender is offering you a better rate. You can switch the mortgage and not have to requalify for your life insurance.
This reduces the risk of facing higher premiums because as we age, the premiums increase with new policies. Worse yet, you may find out at the time that you are uninsurable. Mortgage life insurance with an independent will be for the full amount of the mortgage and not based on your declining mortgage balance.
You do have the option of reducing your premiums when the mortgage balance decreases, but when you are tied to a lender the insurance coverage is for the mortgage balance only and the premiums will remain the same regardless of the balance.
If something were to happen to both you and your spouse, with an independent broker the insurance would pay double, not just your mortgage balance as is the case when insuring with the lender.