Mortgage Insurance

[wimbly11]

Did you go with mortgage insurance and if so, with a bank or with a private lender?

We have heard that private is a better option because banks will continue to charge you the same premium even as your mortgage descreases....I know very little about this and was looking for some advice.

Thanks

[alicia]

We have life insurance that covers the cost of the mortgage should something happen to one of us. It's enough to pay off the mortgage in full and then leave at least two years of living expenses. We decided to go this route because it's the same amount of payout whether the mortgage had $10k left of it, or $100k. With the straight-up mortgage insurance, you pay the same premium but the amount it insures decreases over time as you pay off your mortgage. Didn't seem like a great idea to us.

[blueeyetea]

My husband and I opted out of getting mortgage insurance. At the time, we received life insurance that paid out a lump sum of two year's salary in case of death.

You also have to read the fine print. Morgage insurance doesn't pay the whole mortgage, just the mortgage payment for a certain number of years. For example, if one of you dies, the mortgage payment is paid for 5 years, then you start paying again.

Like Alicia says, get term life insurance that will cover the mortgage and more.

[MortgageQueen]

Get term insurance and also look at disability insurance. I see MANY a family in financial trouble or lose their home because of an illness or accident

Also, please consider the costs of future children education, etc. Make sure you have more than enough to take care of your kids for many years.

[tjthemanto]

Did you go with mortgage insurance and if so, with a bank or with a private lender?

We have heard that private is a better option because banks will continue to charge you the same premium even as your mortgage descreases....I know very little about this and was looking for some advice.

Thanks

Its a bad idea ..go with a regular Term Life Insurance , Or a Critical lnjury/Illness insurance instead with an independent body other than the bank...which is often much cheaper & better tham the Mortgage Life Insurance offerred by the bank.

See below

http://www.thestar.com/life/homes/20...fe_policy.html

[tjthemanto]

http://www.investopedia.com/articles.../avoid_pmi.asp

[dashingjames]

I am thinking of switching my insurance now. I have read a lot in this thread and I can say that it is a good idea reading other peoples suggestions. I am only new to insurances so I'm struggling a lot to choose from many types of insurance.

[MortgageQueen]

The key james, is to have a good advisor that asks you what your goals and plans are. . .preferably someone who has been referred to you by someone you trust.

[Livelyone]

I generally advise against mortgage insurance as it is designed to protect the lender and because it only covers that one liability. I do encourage you to consider a life insurance policy that also covers the cost of the mortgage in the event that you can no longer pay towards it. I personally made my insurance selection based on the standard of living that my spouse and I currently have and how much it would cost to sustain it in the event that I die.

[mulock]

I took out life insurance instead of mortgage insurance.

[lorken]

I took out life insurance instead of mortgage insurance.

Yes, me too. I'm surprised that so many people don't understand what a scam mortgage insurance is. I always tell my friends these two things they should know before deciding between mortgage insurance and life insurance:

1. Life insurance always covers the whole initial insurance amount. But mortgage insurance only covers the *declining balance* of your mortgage, even though you pay the same monthly premium all the way through. Here's a simple example: Say you start off with a $200,000 mortgage, so you take out $200,000 of insurance. Say that 10 years later you have paid off $100,000 of the mortgage, so now you only owe $100,000. If something now happens to you, and your family has to make a claim, life insurance will pay out the whole $200,000, but mortgage insurance will only pay out $100,000 (because that's all that's owing on your mortgage).

2. This is the big one: Life insurance pays YOU/YOUR FAMILY, while mortgage insurance pays the BANK (or trust company) that holds your mortgage. So in the above example, with life insurance YOU or YOUR FAMILY would get $200,000. With mortgage insurance, the BANK would get $100,000 and you/your family would get zip. Even though YOU have been paying the insurance premiums for all those years.

That's why you should always get life insurance, never mortgage insurance. Why should you pay for something that benefits the bank, and not you?

(And no, I don't work for an insurance company )

[redhdlois]

While I owned, I never took out mortgage insurance......being a single person I figured it was not advantageous.....having said that, even a different circumstance, I'd never buy mortgage insurance for reasons stated by above posters.

[bargain_hunter_lola]

When we bought our first house we got the mortgage insurance. We didn't know better. lol.

When I went to our financial advisor for our kids life insurance, we looked over all our options and he explained why we should just increase our life insurance and get rid of the mortgage insurance. All the reasons others have posted. We increased our life insurance to cover the cost of our mortgage and even with the increase, it's still cheaper than just the mortgage insurance was.

[wimbly11]

Seems like a pretty clear message in this thread. Thanks for the great tips everyone

[tobiwobi]

awww im so proud of fellow scers, so smart and informed can't go wrong following advice here. i also do not pay to insure the bank against myself.