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Mortgage Insurance: Lenders
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Mortgage insurance is a special instrument that protects investors and lenders against loss if a borrower stops making mortgage payments. In other words it protects the lender against loss in the event that the borrower defaults. The borrower pays the premium, but the lender at the same time receives the protection. If the borrower defaults and the lender takes title to the property, the mortgage insurer reduces the loss to the lender and shares the risk of lending the money to the borrower.
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Mortgage Insurance is not mortgage life insurance, which pays off a mortgage if you die or become disabled. It is not homeowners' insurance, which protects you from loss from theft, fire or other disaster. Mortgage insurance protects the lender and investor from loss, not the borrower.
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MILWAUKEE, Nov. 16 /PRNewswire-FirstCall/ -- Mortgage Guaranty Insurance Corporation (MGIC) (NYSE: MTG) mortgage insurance (MI) now offers continuous underwriting services to mortgage lenders that are using the Interlinq(R) E3(R) enterprise mortgage lending solution from Harland Financial Solutions. Harland Financial Solutions, Inc. is a wholly owned su.....
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The Mortgage insurance premium is not tax deductible and many lenders offer an alternative. Instead of paying the insurance premium, the lender will increase the interest rate and in essence, insure themselves. In most cases, this method of paying extra interest instead of the insurance premium results in a slightly lower monthly payment and in most cases, one that is tax deductible. Ask to see this comparison.
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Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It's usually required for borrowers making a down payment of less than 20%.
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Once the initial mechanisms are in place, the Homeowners Protection Act will provide lenders with a simple solution to keep borrowers from paying unnecessary mortgage insurance premiums, without making coverage more expensive or harder to obtain. For more information about the Homeowners Protection Act of 1998, lenders should contact their local MBA or consult with their legal counsel for interpretation of specific provisions of the Act.
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