Many people get confused between mortgage protection insurance and private mortgage insurance (PMI). Although the names sound similar, they are very different and confusing the two could cost you your home.
Mortgage protection insurance is an insurance that will pay off your mortgage if you pass away. This coverage ensures that your family will not have to worry about losing their home when you’re gone. An insurance agent can set you up with a policy with affordable monthly premiums. You can also get mortgage disability insurance, which will pay your mortgage if you become injured or ill and are unable to work.
That may not sound confusing, but many people think that private mortgage insurance or PMI is the same thing. Private mortgage insurance is a coverage the bank requires you to have if you make a down payment on your home that is less than 20%. PMI ensures that the bank will be paid if you should default on your mortgage. This protection is strictly covering the bank, not your family. This means that if you only have private mortgage insurance, your family could still lose their home if you are unable to work or if you pass away.
Understanding the difference between these two types of insurance could save your family from losing their home. Just remember that the insurance the bank requires only covers the bank; you have to speak with an insurance agent if you’d like to protect your family from losing their home. If you’re interested in protecting your family’s home, check out these pages: Mortgage Protection Insurance and Mortgage Disability Insurance.
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