Home mortgage insurance is coverage that protects your lender should you default, or fail to make payments, on your home loan. This insurance also helps lower the down payment for your new home. Traditionally, a down payment should be about 20% of the home price. Home buyers who cant afford this kind of down payment sometimes opt to use home mortgage insurance. With this insurance, you can put down as little as 3-5%.
However, there are a few facts you should consider about home mortgage insurance before making a decision.
Home mortgage insurance can be costly. It adds to your mortgage payment, after all. Sure, home mortgage insurance helps you get a home more quickly than youd be able to if you werent able to make the traditional down payment of 20%, but if you are able to put down enough money avoiding the insurance makes more sense. You may also want to consider saving money until you can afford a good down payment.
Home mortgage insurance is sometimes tax-deductible. That may not appeal to you now, since youll still be paying extra money throughout the year, but your increased tax return (or decreased tax payment) could change your mind. If you...
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