| Mortgage payment protection is beneficial to both | | | | insurance, which is often called 'mortgage payment |
| lenders and borrowers. Without adequate safeguards | | | | protection', provides monthly installments for a period |
| against default, the financiers would be taking additional | | | | of time. There would be a maximum limit for such |
| risks, which could reflect in higher interest rates. For | | | | payments. Credit disability and life insurance takes care |
| borrowers, loss of job, sickness, accident, or death | | | | of mortgage payments if the borrower loses his job, |
| could lead to defaults. To avoid a distress sale to pay | | | | ordies. The disbursal, which is made direct to the |
| off the loan, some kind of shield is required. | | | | lender, is not taxable. There is also Mortgage Life |
| Different types of insurance products are available to | | | | Insurance. Almost everyone is eligible for these |
| cover the risk. When the down payment is less than | | | | schemes. |
| 20%, a Personal Mortgage Insurance (PMI) or Lenders | | | | Mortgage protection is available from the Federal |
| Mortgage Insurance (LMI) will protect lenders from | | | | Housing Administration (FHA) for loans advanced by |
| potential default by the borrower. | | | | lenders approved by it. Bush Administration proposals |
| The fee is passed on to the borrower and collected | | | | to be made effective in 2007 contain a new scheme |
| as a part of the monthly payments. If the arrangement | | | | to help those buying a home for the first time. Higher |
| is properly incorporated into the mortgage documents, | | | | insurance premiums may be charged on people with |
| the borrower can obtain tax benefits on the payment | | | | weak credit histories, but this would taper down if |
| of the premium. In some cases, lenders permit | | | | regular repayments are made. |
| discontinuation of PMI/LMI after a period. | | | | Check the market for competitive mortgage insurance |
| Accident, sickness and unemployment (ASU) | | | | rates. |