If you are a current homeowner, chances are you have heard about mortgage protection insurance, and it could be a wise investment to protect your property from foreclosure. But before you decide whether to get mortgage protection or not, get informed.
You may want to ask yourself a few questions:
If you find these questions concerning, it may be worthwhile to learn more about what a mortgage protection insurance plan is, and how it could potentially help you keep your home and provide the peace of mind that your loved ones will be able to remain in their home.
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This type of insurance can be available to any homeowner. If you were to apply for MPI, it is pretty much guaranteed to be accepted. Due to its high accessibility, this insurance can be extremely beneficial to people with underlying health problems or high-risk jobs.
With mortgage protection, the insurance company will pay off monthly mortgages directly to the lender without any guesswork.
While it may be nice not to worry about your mortgage after a traumatic event, having this insurance could potentially be less beneficial as time goes on.
Compared to standard term life insurance, MPI has a much higher cost. This cost remains the same regardless of your decreasing mortgage balance, meaning you may be paying more for less coverage.
If you’ve applied for any home equity loans, MPI will only cover what’s left of the initial mortgage payment, not the new balance.
At most, MPI gives you temporary relief from foreclosure—not a complete financial solution.
MPI can act as a temporary financial cushion. If you have little or no life insurance, it can prevent the bank from repossessing your home if something happens to you.
However, it does not provide money directly to your loved ones—just coverage of mortgage payments for as long as you keep the plan.
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No. Private Mortgage Insurance (PMI) protects the lender, not you, in case you default on your loan. MPI, on the other hand, protects you by paying your mortgage if you lose income or pass away.
No, but they share similarities. Term life insurance gives general coverage to help your family financially after death, whereas MPI only pays off your mortgage.
If you have a high-risk job or are worried about losing income, MPI might be right for you. But if you want broader financial protection, term life insurance may be a better option.
Remember, MPI only covers your mortgage—nothing else. If your mortgage is nearly paid off or affordable, it might not be worth it.
Take your time. Research insurance companies, evaluate their pricing, what they cover, and what they don’t. Make sure the plan aligns with your household’s needs.
You shouldn’t feel pressured to invest in an MPI plan. It may work for some households and not others. If you’re having trouble getting life insurance or are at financial risk, MPI might be worth considering.
To learn more or talk it over, contact us at Mares Mortgage and we’ll help you make the best choice.
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