Mortgage Insurance VS Individual Insurance. Protect Your Mortgage For Less Cost. Halifax Real Estate

If you are buying a home, you will likely be advised on the importance of insuring your mortgage. Most homebuyers, particularly first-timers, already have too many tasks and important decisions during the buying process and overlook insurance. Thus, knowing the best insurance option to choose for your mortgage is critical for protecting your property.

Essentially, mortgage insurance is provided by the financial company that is lending your money for the mortgage. That is why premiums will be added to your monthly mortgage payments. This is not recommended as it may push you into defaulting due to the high monthly payments that you will have to make.

There is a much better option when buying a home, and that is using individual insurance from an agent or insurance broker. Either way, you will gain from having your mortgage fully paid off so that your family can still retain the house even if you pass on. There are great differences between these two options.

When you go with individual life insurance for your real estate, your premiums are fixed for a certain amount of time, which is basically during the term of the mortgage. In contrast, the premiums for mortgage insurance normally increase after a certain specified period, generally after 5 years. This can affect you negatively, particularly if your finances don’t necessarily improve after 5 years.

The other major differentiating factor when buying a home with individual life insurance is basically that you own full rights to the policy. Conversely, the bank owns the mortgage insurance policy and this means it has full control. However, when you use the life insurance option, you will be able to have full control over all the various policy options.

Individual life insurance is more flexible than mortgage insurance in any real estate since you can get better premiums based your health, age and sex. In contrast, mortgage insurance has blended premiums such that both non-smokers and smokers pay similar rates with no differences. The other way that life insurance offers flexibility to the users is that you may get the chance to convert the term insurance into a permanent insurance while its competitor cannot be converted.

People who choose life insurance when buying a home can purchase the amount of insurance cover they need. However, for mortgage insurance the face value of the coverage is just for the precise amount in the mortgage. Thus, the coverage will be terminated once the repayment ends. The life coverage plan is completely portable irrespective of the amount of the mortgage.

In short, life insurance is simply much better than mortgage insurance in any real estate and will save you money, in the long run.

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Christian Bailey
Licensed Real Estate Professional
902-579-3231

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