If you’re purchasing a new house, you’ve probably heard about mortgage protection insurance. If so, you may wonder, “Is mortgage protection insurance worth it?”
Whether you’re considering cash-out refinancing in Texas or looking into mortgage protection insurance, Champions Mortgage has all the answers. Keep reading to discover everything you need to know about the pros and cons of mortgage protection insurance to help you determine whether it’s worth it.
What Is Mortgage Protection Insurance?
Mortgage protection insurance is a type of life insurance you invest in to pay off your mortgage in the event of your death. In other words, when you die with an unpaid mortgage, your protection insurance allows your beneficiaries to continue living in the home rather than experience eviction because they can’t pay off your mortgage.
The Benefits of Mortgage Protection Insurance
When evaluating the worth of mortgage protection, consider its benefits compared to other life insurance forms.
Avoids Underwriting
Is mortgage protection worth the cost? That partially depends on whether you’re avoiding the underwriting process. Most forms of life insurance require underwriting, which helps providers determine how much you’ll pay after examining your risk.
Some mortgage protection insurance providers forgo the underwriting process, so you won’t go through a medical exam and uncomfortable questions. If you’re in poor health or at risk of high rates for other types of life insurance, you’d benefit from finding a mortgage protection insurance provider that avoids underwriting.
Prevents Post-Death Eviction
The biggest factor in assessing the value of mortgage protection coverage is that it allows your family to continue living in your home even after you die. Ask yourself the following questions:
- Do you have a family living at home, or do you live alone?
- Could your family pay off the mortgage without protection insurance?
- Do you have other forms of life insurance?
- Does your family have other options for housing after your death?
Improves Financial Stability
Is mortgage protection insurance worth it? It is if your family needs increased protection against financial instability after your death.
If you’re leaving your family a sizeable nest egg or have good life insurance, you won’t need mortgage protection insurance. However, if you don’t have any other way to provide for your family, this insurance might be your best solution.
The Downsides of Mortgage Protection Insurance
When determining the benefits of mortgage protection insurance for homebuyers, don’t forget to consider the downsides.
Poor Comparison to Life Insurance
Mortgage insurance protection doesn’t provide the same level of benefits as whole-term life insurance. It usually requires higher premiums for a lower payout. If you can obtain traditional life insurance, that’s likely a better fit.
Adds Monthly Costs
If you’re already on a tight budget paying your mortgage premium and other insurance policies, you should seriously consider whether you can afford another monthly payment.
Non-Guaranteed Payoff
In calculating your mortgage insurance value assessment, consider the likelihood of paying off your mortgage before you die. If you do, you will have paid all those monthly premiums with nothing to show for it.
Contact Houston’s Trusted Mortgage Professionals
Is mortgage protection insurance worth it? That depends on how you weigh the pros and cons, but if you don’t have access to traditional life insurance, it’s a great option to protect your family. Additionally, if you’re considering removing mortgage insurance from an FHA mortgage, we can guide you through the process.
Whether you need more information on a jumbo mortgage or are looking for mortgage protection insurance, we can help. Contact us online, or speak with a qualified loan officer by calling (281) 727-2500 today.
