Buying a home is a major decision and involves years of financial commitment. Most people need to get a home loan that charges interest. The homeowner pays payments every month to the home loan or mortgage company. But what if something goes wrong? That is where mortgage insurance comes in. In California, home buyers can be protected by this mortgage insurance for a very small cost. California mortgage protection insurance protects homeowners’ investments in their homes.
Mortgage Protection Insurance: What to Know Before You Buy
Californians who have made the biggest investment in their lives by purchasing homes need their investments protected when something goes wrong. In California, homes cost several hundred thousand dollars for modest ones and more for higher quality or larger homes. California homeowners Insurance is here to protect that sizable investment.
When the family breadwinner dies, loses their job, or becomes incapacitated, it is a devastating situation both emotionally and financially. Families may be in danger of losing their home and all the money they invested in it if they do not have help. 2020 and the COVID Pandemic and recession are an example of bad things happening to good people.
What Is MPI
Mortgage protection insurance is a kind of insurance available to pay off a family’s mortgage if the wage earner responsible for paying mortgage payments dies. There are MPI policies that also offer limited mortgage payment coverage for people who become incapacitated or disabled. This coverage gives the family time to adjust to their new circumstances and re-evaluate their living situation.
Remember, MPI insurance is different from the required PMI or private mortgage insurance that protects the lender if a homeowner defaults on the home loan. With PMI, the family would still owe the balance of the home loan if the breadwinner dies.
Mortgage Protection Insurance protects the homeowner’s family in case they die or become disabled. There will not be a large, mortgage to pay off when a person dies. The family has time to make plans and adjust to the new situation. This is peace of mind for a family in mourning.
California Mortgage Protection Insurance Gives Benefits
- There is guaranteed approval for homebuyers even if they are in poor health or have risky jobs. Life insurance does not offer this.
- There is disability protection that provides a few mortgage payments for homeowners who become disabled and can not earn the same income as before.
- There is less confusion for people in California with this insurance. the money is paid directly to the mortgage company.
- There is peace of mind for homeowners with large mortgages in case disaster strikes.
MPI Isn’t Perfect
- There may be a lack of flexibility. MPI pays off the mortgage and nothing else. Beneficiaries have no choices.
- MPI will cost more than a term life insurance policy. This may be more true for healthy, responsible adults.
- There is a shrinking coverage as the mortgage balance goes down with monthly payments. But, the insurance rate remains the same so a homeowner will pay the same premium for less cover over time.