While people are full of largely uninformed advice about why mortgage protection insurance is unnecessary, some of those recommendations come with a grain of truth. Here, readers will learn a few reasons why they may not need mortgage protection.
A Higher-Than-Average Income
The average household income in the US hovers around $60,000 per year, with some families making more and some making less. If a person makes an average income, they will bring home roughly $49,000 each year, not counting state and local income taxes. For those making significantly more than the average, mortgage insurance might not be a must-have.
The Monthly Payment
The average US mortgage payment is approximately $1000 per month, exclusive of maintenance, utilities, repairs, and homeowner’s insurance. If a borrower’s payment is lower, they may not need coverage.
Auto Loans
Average auto loan payments have hit a record high, even for families with just one vehicle. However, for those with a low loan payment—or none—mortgage insurance may be an unnecessary expense.
Grocery Bills
The average cost to feed a four-person household ranges from $150 to nearly $300, depending on the family’s location. When families spend more on groceries, they may not have enough money to invest in mortgage insurance.
Retirement Savings
After spending on auto loans, groceries, and other bills, it’s time to consider putting something aside for retirement. When workers forgo mortgage insurance, they have more money to save for their golden years.
Inflation
Under the current inflation rate, workers’ retirement income will be worth much less than it is now—and rising income tax rates will make the numbers shrink even more. Many believe that inflation won’t play much of a role in the coming years, which leads them to skip over mortgage insurance.
Credit Cards
Many people don’t just spend what they earn—they also spend what they don’t have. The average American household has over $6000 in credit card debt, and most people don’t have enough ready cash to pay their bills, live their current lifestyle, and save for retirement. However, for those who are earning enough to live debt-free, mortgage insurance may not be a necessity.
Life Insurance
Most people tend to struggle with money, and those situations only get worse when a partner or spouse passes away. It’s not like that for everyone, though. If a widow or widower can afford to live comfortably after losing their loved one, they may be able to keep their home without buying mortgage protection life insurance.
When Mortgage Protection Isn’t Necessary
If a homeowner can guarantee the following, they may not need mortgage insurance.
- Their finances are (and will always be) in good shape
- They’ll stay alive until the home is paid off
- They will remain in good health and not become disabled
- Their spouse will not pass away or become disabled
- They’ll keep their job
- Their stock investments won’t lose money
- They can afford to invest thousands per month in retirement planning
When someone says that mortgage protection isn’t necessary, it’s important for homeowners to determine whether those scenarios apply to them. While it’s not necessary for everyone, mortgage insurance will help families keep their homes after a wage earner’s untimely death. Call or click today for more details on mortgage protection.