Hometown Financial Group helps homeowners protect their families with mortgage protection insurance, which pays off a mortgage in the event of death. Contact an agent today to learn more about how you can take care of your family’s well-being.
Mortgage protection insurance (MPI) is essentially life insurance for your mortgage. You may hear it referred to as mortgage life insurance.
It pays the balance of your home loan if the insured person dies. There are several different types of mortgage coverage, but they all generally pay off the remaining balance on a mortgage at the time of death.
This payment goes directly to the mortgage lender. Although this keeps your family in their home, they do not have the freedom to use the benefit for their own purposes. The benefit also decreases over time as you continue to make payments on your mortgage.
You can compare mortgage protection to private mortgage insurance (PMI). If you pay less than 20% as a downpayment on your home, your mortgage lender will most likely require you to purchase private mortgage insurance. This coverage does not benefit you, but ensures that the home will be paid for in the event of your death.
Mortgage protection acts as a safeguard to keep your home from going into foreclosure. An untimely death can dramatically reduce a family’s income and make it difficult to make your mortgage payments. Mortgage protection steps in and pays the remainder of the loan on the policyholder’s behalf, so the family gets to stay in the home. Here is what it does for you and your home:
A homeowners’ mortgage protection policy typically works like this: First they buy the policy, then they pay a monthly premium and finally, if they pass away before paying off their house, the company pays off the remaining balance on the mortgage. Some policies will pay a certain amount of mortgage payments instead of the full balance, so read the policy thoroughly for those details.
The amount of coverage needed depends on the amount of debt still owed on a home loan. If a person has $250,000 left on their mortgage, they can purchase $250,000 in coverage. Most insurance companies will want you to purchase the mortgage protection within 24 months of closing on the home, but some may allow you to wait up to five year to purchase a policy.
Term life insurance can sometimes be a better investment than mortgage protection. Either way, it’s best to seek the advice of a trusted agent, like the ones at Hometown Financial Group. We’ll help you weigh your options!
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