I Got an Insurance Policy for My Mortgage

by Darwin on December 23, 2011

The following is a Guest Post:

I can’t imagine that I’m alone in this world in not wanting to pay for insurance – ANY insurance. My health insurance is through the roof and makes up about 20% of my monthly expenses. Considering I haven’t even had a cold in two years, it needles me to no end. I’ve never been in a car accident, yet I’m paying for car insurance. I’ve never had a break-in, yet I’m paying for renters insurance.

But insurance is – obviously – just that! It’s necessary. It’s a safeguard, a protection. It’s better to act “as if.” Also, in many cases, it’s the law.

Now I’m venturing for the first time into real estate; I’m buying (or trying to buy) my first house. Forget about homeowner’s insurance (which is next by the way), now I have to buy mortgage insurance.

While I’m lucky enough to be in good health, my finances can’t make the same claim. I have less than the required 20% needed for a down payment. This is where mortgage insurance comes in. It’s a loan to protect the lender in case I default on my mortgage.

Of course I’m not planning to default!!!!! But… In this economy, nothing is certain. I could lose my job. My house could go into foreclosure. There are countless terrible things that could happen (I won’t name them all).

What is Mortgage Insurance?

Private mortgage insurance (PMI) protects lenders from losses on low down payment loans. It’s the only way I could buy a home with a minimal down payment.

Are MI premiums tax-deductible?

Yes, which is very good news. Tax deductions are available for both seasoned and  first-time homebuyers. Your household income and marital status affect deductions.

MI protects the lender, what’s in it for me?

There are a couple of benefits, the primary one is that without PMI, people with little money for a hefty down payment wouldn’t be able to buy that house – period.

Also, Genworth Financial offers Job Loss  Protection that will help with mortgage payments in the event that of involuntary job loss.  On the lighter side, Genworth also offers Homebuyer Privileges in the form of discounts and rebates so you can start doing work on your new home. Because that’s what it’s all about in the end – making a home.

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