What is mortgage insurance?

Mortgage insurance is an insurance policy that protects the lender from losses if a borrower defaults on a mortgage loan in New York. This insurance policy is usually required if the borrower is putting down less than 20% of the purchase price of the home as a down payment when obtaining a mortgage loan. Mortgage insurance typically does not protect the borrower, but rather the lender, as it reimburses the lender if the borrower defaults. Mortgage insurance may be provided by a private mortgage insurer or may be offered as an option provided by the lender. Private mortgage insurance premiums are typically added to the monthly mortgage payment and can range from 0.2%-1.5% of the loan amount. Some lenders may offer mortgage insurance without including a monthly premium but instead including the cost in the mortgage itself. In this case, the borrower would pay a higher overall amount when obtaining the mortgage. It is important for potential borrowers to understand the conditions of their mortgage loan and whether or not mortgage insurance is included. Knowing the costs associated with mortgage insurance can help a borrower make an informed decision when looking to buy a home in New York.

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