Banks And Mortgage Insurance Plan


by Greg Andrews - Date: 2007-03-06 - Word Count: 558 Share This!

First thing which you will asked by the bank while seeking loan is to furnish mortgage insurance. The motive involved is to seek assurance that in the unfortunate event of either you or your spouse's death, loans will be finally paid off which will be a comfortable situation for both your family and the bank.

Now coming to the mortgage insurance, most financial institutions offering this instrument often act as if they are doing a favour to the customer. But is it really the case? Hardly. If a customer has little time and patience, he can shop around and avail the kind of deal he desires. At least, an equal amount of protection for loan taken for the property.

In structural terms, a mortgage insurance hardly appears out to be any different from term-life insurance. In both kinds of policies, they're valid for a specified period, pays benefits if something happens to you or your spouse. The real difference emerges in terms of control of the policy and the kind of premium you have to pay to retain the mortgage insurance plan.

If you have opted for a mortgage insurance offered by the bank, your own control over the policy will be minimal since it will be attached with other borrowers under a group plan. Customization in sync with your needs and affordability may be a vital missing factor.

For instance, if you take this loan through a third party provider, you would have the option of selecting your own beneficiary, can decide the expenditure pattern of the proceeds and even decide the cancellation of policy any time you want.

A lending institution, on the other hand, will keep you deprived of these crucial controlling options. As if these were not enough, the bank also retains the rights of denying renewal of your policy and could even terminate it when the house is sold. But if the policy has been taken from a third party provider, you can have your say on these matters.

Cost is another crucial factor. Premium on policy taken from a third party normally do not shoot up irrespective of the time span. But banks and financial institutions can promise no guarantee on this front and they can well increase the premium level during the existence cycle of the policy.

So ultimately you will end up paying more for a policy taken from a bank. But that is not all. There will be a continuous depletion in the value of the policy if taken from the bank which is not the case if the policy has been procured from a third party.

Of course, there are people who prefer to higher rates on their mortgage insurance since they are not comfortable dealing with insurance agents. But there are agencies and organisation which can take care of this and tell you about the insurance providers who can provide best response to your requirements.

An organization like the Hughes Trustco Group, can even furnish quotes for you from different insurance providers so that you can select, what you may find best deal.

The crux of the point is: mortgage insurance is vital and you should not ignore it while buying a home or looking for refinancing options. But you should be careful in extracting a much better deal than those provided by the banks. Deals which empower you to have greater control over your own policy.


Related Tags: mortgage, mortgage refinance, home loan, bad credit mortgage, mortgage calculator

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