Mortgage insurance is required by banks if you have less than 20% down in cash for a down payment. This fee is rolled into your monthly payment. It covers potential risk of default, as those who don’t have 20% down in cash are a higher liability to the bank. It does not mean that if you die, someone else will pay your mortgage. It just means that the bank will take an extra risk on you.
Now, if you don’t have 20% down but want to avoid this fee, there are first time buyer loans that don’t require mortgage insurance, though you will have a higher interest rate. You also have the choice to pre-pay your mortgage insurance when you close on the home, which is typically $1,500-$2,000 up front. If the seller is paying for your closing costs, you might even be able to get this covered in the closing costs, thereby lowering your monthly payment.
Have any additional questions about mortgage insurance or other closing costs? Feel free to reach out to me via email or text!
