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Advice on Mortgage Insurance

Mark Cappel
UpdatedMay 27, 2024
Key Takeaways:
  • Different types of
  • Who benefits from coverage?
  • Is mortgage insurance right for me?
  • Other options to mortgage insurance

My wife and I are 62 and retired. We have a mortgage of $195,000. Should we purchase mortgage insurance?

My wife and I are 62 and retired. We have a mortgage of $195,000. Should we purchase mortgage insurance?

The term "Mortgage Insurance" can refer to several different insurance products. For instance, some lenders require borrowers to purchase the kind of mortgage insurance that insures the lender against potential losses incurred in the event the borrower defaults on the loan. Such insurance does nothing to help a borrower who falls behind on their payments.

I am guessing that you are inquiring about mortgage payment insurance, such as mortgage disability insurance and mortgage life insurance, which are insurance plans that may pay a homeowner's monthly mortgage payment in certain situations, typically involving the disability or death of the mortgage holder.

Such insurance can be costly and some people find their money better spent in other ways, like investing or saving to create a "rainy day" fund to provide a cushion should a disability or death of a spouse render them unable to pay their mortgage.

I would recommend that you consult with a qualified financial planner to determine the best option available for your specific financial situation.

That said, when looking at such insurance plans, always read the fine print. Many plans have exclusions for things like pre-existing conditions, as well as limits to when and how long the plan will cover your payments. Be sure the plan actually covers the specific kinds of situations that you are concerned about.

Then calculate the cost of the plan and research other financial strategies to determine which one delivers the most useful protection.

Navigating retirement can be tricky, so again, I want to recommend that you seek advice from a qualified financial planner as you seek the best solution for your financial needs.

I wish you the best of luck, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

Bills.com

Mortgage market update: the latest

Mortgage rate fluctuations should come as no surprise. If you are buying a home or refinancing your existing mortgage, it is important to stay informed about the current mortgage rates.

Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 is 6.88%. This represents a 6 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
According to Freddie Mac, the 15-year mortgage rate for April 10, 2024 is 6.16%. This is a 10 basis points increase from last week’s rates.

Understanding the impact of mortgage rates on your finances
When it comes to determining your monthly payment, mortgage rates are a key factor to consider. Here are the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:

  • 30-year conventional loan is 7.09%
  • 15-year conventional loan is 6.29%
    Based on the provided rates, a $279,082 30-year mortgage would result in a monthly payment of $1,874. Alternatively, a 15-year mortgage would require a monthly payment of around $2,399.

Experience a smooth mortgage process: Shop around and get pre-approved today!
Shopping around for mortgages and getting pre-approved can make your home-buying or refinancing process easier. Ready to take the plunge? Check Out mortgage rates now for the best options available.

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2 Comments

jjack, Dec, 2010
Private Mortgage Insurance are mortgage life insurance products that protects the borrower from the lender in the event of default which generally, covers a substantial portion of the capital borrowed. They are insurance products of private insurance companies.
JJames Morgan, Aug, 2010
Such insurance can be costly and some people find their money better spent in other ways, like investing or saving to create a "rainy day" fund to provide a cushion should a disability or death of a spouse renders them unable to pay their mortgage.