One of the most common misconceptions when purchasing a home and having a loan is PMI. When you buy a home with less than 20% down, the lender will most likely require you to purchase PMI (Private Mortgage Insurance). PMI protects the lender if you stop making payments on your loan.

Wait, re-read that last sentence!!!

PMI protects the lender if you stop making payments on your loan. PMI does not protect YOU!!

PMI DOES NOT protect

The borrower

The co-borrower

The borrower’s family

The borrower’s dependents

PMI is set up by the lender when you purchase a new home or refinance. The lender sets this up with a private insurance company.

If you were to pass away unexpectedly, and your loved ones are not able to make the payments on the home, the lender would still foreclose on your home and leave your loved ones without a place to live. 

PMI vs. Mortgage Protection Insurance

Mortgage Protection insurance is different. Mortgage protection insurance protects you if you pass away or become permanently disabled. You can choose who you want to be the beneficiary and who you want to receive the money. If you were to pass away, the death benefit could be used to pay off the debt owed.

Mortgage Protection Protects YOU!!

Let's look at an example. Joe and Valentina purchase a home for $500,000. They can use a down payment of $50,000 to buy the house. Because the down payment is less than 20%, the lender requires them to purchase PMI when they close on the loan. This is an added payment to their loan payment. They decide later not to purchase mortgage protection insurance or life insurance. When Joe passes away, Valentina is responsible for the continued payments on the loan. The bank will foreclose on the property if Valentina can not make the payments. The PMI is triggered and paid to the lender. The lender receives the home and the insurance money.

Let's look at that same scenario but add mortgage protection insurance to the equation. After the couple purchases the home, they each buy a mortgage protection insurance policy for $450,000. When Joe passes away, Valentina can use this death benefit, tax-free*, to pay off the mortgage leaving the home free and clear of debt. She no longer has the mortgage payment, and she also has no more PMI insurance. More importantly, Valentina and the family are able to stay in the home.

If you have a mortgage right now then having your own personal mortgage protection policy is essential.

EZ mortgage protection is offered by Aultium Insurance Services, LLC. Aultium has over 60 combined years of service. They specialize in mortgage protection insurance. If you would like a free quote on how mortgage protection can protect your home - please click below. If you would like to read more about Mortgage Protection Insurance you can click here.