If you’re looking for a Texas-sized explanation of mortgage insurance, you’ve come to the right place! You may be asking yourself, what even is mortgage insurance? Basically, mortgage insurance is something that helps protect the lender if the borrower stops making payments. But don’t worry, it’s not as scary as it sounds. In this blog post, we’ll be breaking down everything you need to know about mortgage insurance in Texas.
First things first, let’s talk about the two types of mortgage insurance: private mortgage insurance (PMI) and mortgage insurance premium (MIP). PMI is typically required for conventional loans with a down payment of less than 20%. MIP is required for most FHA loans, and the amount is usually added to the borrower’s monthly mortgage payment.
Now, you may be wondering how much mortgage insurance is going to cost you. The cost of mortgage insurance can vary depending on a number of factors such as the loan type, loan amount, and credit score. Thankfully, if you continue making payments on time and your home value increases, you may be able to cancel your mortgage insurance altogether.
It’s also important to note that mortgage insurance can only be canceled based on the original property value, so if you make improvements to your home that increase its value, you may not be able to cancel your mortgage insurance. Don’t let this discourage you, though – making improvements to your home can also increase its value and help you get a better return on investment in the long run.
Now, let’s talk about what happens if you don’t pay your mortgage insurance. If you stop making payments on your mortgage insurance, your lender may begin foreclosure proceedings on your home. It’s also important to note that mortgage insurance is not the same as homeowners insurance, which covers damage to your property and personal belongings.
One last thing to keep in mind – if you’re considering refinancing your mortgage, be sure to factor in the cost of mortgage insurance. Depending on your loan type and amount, your mortgage insurance may change when you refinance, so it’s important to do your research beforehand.
Whew, that was a lot of information! But now you know everything you need to know about mortgage insurance in Texas. While it may seem complicated at first, mortgage insurance is just another part of the home-buying process. Remember to do your research, make your payments on time, and don’t let mortgage insurance scare you away from owning your dream home. Happy house hunting!
