A Private mortgage insurance broker is an insurance professional who helps clients obtain mortgage insurance appropriate to their needs and the requirements set forth by a lender. Instead of representing a specific insurance company, the broker has access to information about policies on several different types of plans and can help clients negotiate the best deal. The law generally requires insurance brokers to be licensed and to display their license numbers for the benefit of customers in communications such as advertisements and business cards.
Mortgage insurance protects lenders from default. Lenders often require it when borrowers make a low down payment, and borrowers can also choose to take it on their own if they have special concerns about default. The price of mortgage insurance generally varies depending on the size of the mortgage and the level of risk. Public insurance is available to some borrowers and in other cases it is necessary to purchase private mortgage insurance (PMI).
A mortgage insurance broker’s job begins when a client requests assistance. Real estate agents often refer their clients to the broker as part of the services they offer, with the goal of closing the deal and successfully completing the property transaction. Real estate buyers can also research mortgage insurance brokers on their own. The broker will meet with the client to discuss the situation, including the nature of the mortgage and any concerns the client may have.
After collecting information about the customer, the mortgage broker can determine what types of insurance they are eligible for and present them with a list of options. A mortgage insurance broker can discuss the pros and cons of different policies, pointing out issues such as premium costs, the amount of coverage provided, and any additional clauses about the policy. You can offer on-demand recommendations, but won’t push customers to buy a particular plan, and you can also offer advice on packaged products that may be cheaper, like a bundled mortgage insurance and life insurance plan.
Once customers select a plan, the mortgage broker initiates the paperwork to initiate the policy and submits the paperwork to the realtor and lender. This alerts them to the fact that the borrower is ready to carry mortgage insurance on the loan. With this documentation and other proof of compliance with the loan terms, the lender can originate the loan and close the deal, transferring funds to the seller.
Mortgage Protection Insurance vs. PMI
People often hear mortgage insurance and automatically think of PMI, or private mortgage insurance. However, there are some clear and distinct differences between mortgage protection insurance policies and the PMI coverage required on many mortgage loans.
Mortgage protection insurance is an optional coverage designed to pay the balance of a home loan if the owner dies or in the event of serious illness, access up to 90% of the insurance value while still living. In other words, this type of insurance protects you and your family.
Private mortgage insurance (PMI) is the coverage that mortgage lenders may demand if the homeowner fails to put up a down payment of at least 20% when purchasing the home. PMI protects the creditor, not the homeowner, if the debt is not paid as scheduled. He will not pay the balance on the house even if the owner of the house dies unexpectedly.
What is Mortgage Protection Insurance Today?
For the most part, protecting your mortgage is just the main reason to buy a solid life insurance policy. In fact, companies often ask about your mortgage balance when helping you calculate how much life insurance coverage to buy.
Life insurance depending on the age of the person can cost the price of a pizza, in addition to being significantly super versatile.
Life insurance gives your family options. If they want to use the death benefit to pay for the house, they can; if they prefer to use that money elsewhere, that is also an option. And if you want to refinance your home mortgage over the years (without interfering with your life insurance coverage), you can.
What are the expected costs of insurance for mortgage protection?
There are many factors that influence the cost of life insurance coverage, even if you are buying it to protect your home mortgage. This includes the level of coverage (i.e. the amount you owe on your home), your age, your health, your location, and things like smoking or hobbies.
For example, coverage of $500,000 for 30 years, for a healthy, non-smoking woman in her 30s, can expect to pay around $35 a month.
