Mortgage Insurance: Why Choose an Insurance Company?
Buying a house is exciting – a life-changing event that gives you roots and security, and is a major personal asset. There are a lot of hoops to jump through, however, before you get there. Along with all the financing, paperwork and planning, there are details that many first time homebuyers might not realize are a part of the deal. One of these is Mortgage Insurance.
There are two options when looking at coverage for your new home: go through a bank or go to an insurance company. There are several benefits to the latter. Consider the following:
1) No surprise if you need to make a claim, as you are underwritten up front and not at the time of claim, when there may be a loophole allowing the bank not to pay
2) The balance doesn’t decrease with your mortgage amount
3) You choose the beneficiary instead of the bank paying itself
4) If you change lending institution, your policy doesn’t have to reset on the fine print condition of the bank’s policy
One of the primary benefits of covering your mortgage through an insurance company is the fact that you own the policy. Were you to go the bank route, your policy is a group policy, and is controlled by the bank. When you own the policy, you are the only party who can cancel or change the policy.
With Mortgage Insurance provided through an insurance company, you choose the amount of coverage. In the bank scenario, your coverage is equal to your outstanding mortgage balance. That means that as you pay down your mortgage over time, the amount that the bank will pay out also reduces.
An important distinction between the two types of mortgage insurance providers is that, should a claim be submitted and approved, a bank will pay itself, as it is the lender. With an insurance company, you receive the payout directly to cover outstanding financial obligations as you see fit.
With a policy provided through an insurance company, your policy and premium remain the same even if you refinance. This is typically not true in the case of bank coverage where your cost is the same, but your balance is reduced to your mortgage amount. Usually, banks will also require that you re-qualify for coverage.
In the case of coverage with an insurance company, your policy is underwritten when your application is accepted. With a bank, your policy is not underwritten until you claim.
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The above are just some of the benefits of covering your mortgage through an insurance company. The agents at Cooke Insurance Group have years of qualified, professional experience in providing mortgage insurance, and are available to talk with you further about your specific needs and the benefits of having Cooke help protect your mortgage. After all, your home is more than just an investment.