What is mortgage insuranceMortgage Basics
Mortgage insurance is a type of insurance that protects lenders in the event that a borrower defaults on their mortgage payments. It is typically required when the borrower makes a down payment of less than 20% of the home’s purchase price.
The purpose of mortgage insurance is to reduce the risk for the lender, as a borrower with a low down payment is considered to be a higher risk for default. If the borrower is unable to make their mortgage payments and the lender forecloses on the property, the mortgage insurance policy will reimburse the lender for any losses incurred.