Definition
Insurance that protects the lender if you default on your mortgage, often required if you have a small down payment.
What to consider
- Keep track of when you might be eligible to cancel it.
- Consider its cost as part of your total housing expenses.
- Review your policy details to see if you’re overpaying.
Real world scenarios
- Kari pays mortgage insurance each month after buying a home with a 5% down payment. She plans to cancel it once her equity reaches 20%.
- Emilio calculates that mortgage insurance adds $90 to his monthly housing costs. He budgets for this expense while aiming to build equity quickly.
- Confirming the rules for removing mortgage insurance encourages Jana to make extra principal payments, speeding up her eligibility for cancellation.
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