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Mortgage insurance is a type of insurance that protects the lender in case the borrower defaults on the loan. It is typically required for government-backed loans, such as those backed by conventional loans with a down payment of less than 20%.
When a borrower is required to have mortgage insurance, they will have to pay an additional premium on top of their monthly mortgage payment. This additional cost can add up over time and can make the overall cost of the loan higher.
The cost of mortgage insurance can vary depending on the type of loan, the down payment, and the credit score of the borrower. Additionally, borrowers with a lower credit score may have to pay a higher mortgage insurance premium.
It’s important to consider the additional cost of mortgage insurance when comparing different loan options and determining how much home you can afford. Some borrowers may choose to make a larger down payment to avoid the need for mortgage insurance and lower their overall costs.
In summary, mortgage insurance is a type of insurance that protects the lender in case the borrower defaults on the loan. It is typically required for government-backed loans and conventional loans with a down payment of less than 20%. This can add to the overall cost of the loan, and the cost of mortgage insurance can vary depending on the type of loan, the down payment, and the credit score of the borrower. It is important to consider the additional cost of mortgage insurance when comparing different loan options and determining how much home you can afford.
