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Clifford Said:

Insurance: Mortgage or addtional life?

We Answered:

This Accidental Death Mortgage Insurance is often called "Optional Insurance" by mortgage industry professionals.

In the mortgage industry, Optional Insurance is thought to be a rip-off. If you have any sort of Life Insurance, then your beneficiaries will receive a ton of money if you die. If they choose to pay off the mortgage with that extra cash, nothing is stopping them. If they wish to buy a new house or open a new business (and leave the mortgage balance as it is), then they would have those options as well.

I recommend against Mortgage Life Insurance (Optional Insurance). You can get a better deal on a regular Life Insurance policy that will accomplish the same objectives and offer your beneficiaries more flexibility.

Hope that helps.

Good luck!

Andre Said:

Can I purchase mortgage insurance on a bank mortgage in-case of a natural disaster?

We Answered:

Make sure you have all the info on the coverage by the HOA as they are at times under-insured. You should get a copy of the policy from the HOA and have your insurance agent review it as well.

Speaking of which, make sure you have enough coverage (you do have your own insurance....don't you?) on the contents and structural parts of the town home that you're responsible for. You HOA documents will have this information.

As far as insurance in the event of your death (to have your mortgage paid off), most mortgage companies and even companies like New York Life offer policies for this purpose.

Sidney Said:

what is private mortgage insurance and can you purchase a house without?

We Answered:

Private mortgage insurance comes into play typically when you have less than a 20% down payment on a property. What it is is insurance (which you pay for) that guarantees that if your lender has to foreclose on your property and they end up selling it for less than what you owe them, the Private mortgage insurance company will make up the difference. The only bad things are then that the private mortgage insurance company can go after you for a partial or full reimbursement to them for what they had to pay out. I had this happen to me a number of years ago. As for how you can purchase a house without it, easiest solution is to have a 20% down payment. Some lenders though have changed the rules regarding PMI, and only require it with less than a 10% down payment. There are also some first-time home buyer programs that don't require PMI either.

Hilda Said:

Why does the REO Bank "seller" submit my purchase offer to MI (Mortgage Insurance) for review?

We Answered:

The bank is losing money on this house. They had "insurance" in case they ever lost money. The insurance was MI. They are finding out how much the insurance company is going to pay them before they finalize their response to your offer.

THis is not happening much since no one used MI during the realty boom years.

Esther Said:

Can a bank change after buying out our mortgage demand for us to purchase more flood insurance?

We Answered:

The loan holder (bank or mortgage) has the right to purchase the coverage in lieu of you doing it.
However, it is a real judgment call on how much flood coverage you need.

You might be getting confused between how much flood coverage you have and what your real risk of loss is.

You should assume that a flood could cause a total loss of your property and contents, realizing that the FEMA National Flood Insurance Program has a cap of only $250,000, which may or may not be enough to rebuild your home and replace its contents.

If your lender feels you need more coverage, you probably do, considering what's at risk.

Remember that if you suffer a total loss and you only have a partial coverage, you are going to not have enough money to rebuild AND you are still going to owe on your old mortgage.

So you should err on the side of safety and make certain you have enough coverage.

Corey Said:

When I bought my house in 2002, I was not required to purchase mortgage insurance. Now?

We Answered:

No, no, no. Mortgage insurance is what the lender makes you pay in case you default on your loan. It does not protect the homeowner in any way. Mortgage insurance is usually required for home buyers who don't have enough money to make a decent down payment, and just barely enough to make the mortgage payments each month.
In other words, if someone buys a home with no little or minimal money as a down payment, and their income to expense ratio exceeds a certain percentage, the lender may fund your mortgage, but they are going to take out insurance so that if you don't make your payments, they will still get all their money back. Instead of them paying for that insurance, they charge you for it.
I don't know of any simpler way to explain this, but mortgage insurance has nothing to do with someone paying your mortgage for you. It has to do with the lender to whom you make your payments, so if you can't or don't or are not able to make your payments, they still get all their money back.
You suffer the consequences, they get their money, and you've paid for them to be able to do that.
What do you think all this economic reform has to do with?