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Why do I have to pay MORTGAGE INSURANCE? Thanks

Why do I have to...
Why do I have to pay MORTGAGE INSURANCE?
Thanks
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Answered in 3 minutes by:
5/1/2018
Lucy, Esq.
Lucy, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 32,268
Experience: JA Mentor
Verified

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

Mortgage insurance is to protect the bank in the event that you can't afford to make the monthly mortgage payments. After the housing crash in 2009, most banks will not loan funds for a mortgage without insurance unless the buyer meets certain requirements. Usually, their requirement is a substantial down payment (20% in most cases). It's honestly a waste of money for most people, but if you want the loan and don't have the cash to make a large down payment, it is something you're required to agree to. That way, if you default on the mortgage, the insurance company pays the bank for your missed payments.

In most cases, mortgage insurance can be removed either when you pay off a certain amount of the loan or of the value of the home increases. Talk to the bank to see what their requirements are for both automatic removal and getting it cancelled early.

Have I answered your question? If any part of my response is unclear, please reply WITHOUT rating so I can clarify. My goal is to provide excellent service, so if I've done that, please give me a 5-star rating before signing out. Thank you for using JustAnswer.

Lucy, Esq.
Lucy, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 32,268
Experience: JA Mentor
Verified
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DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

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