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Posts Tagged ‘mortgage life insurance’

The Canadian housing finance system has made it possible for you to buy a property in Canada even if you are not able to save enough for the down payment. Better yet, it allows buyers to buy a loan with a 5% down payment, but will be able to get an interest rate as if you made a 20% down payment. How can this be? This is made possible by buying loan insurance for the amount borrowed on the mortgage. While you are able to get a residence without paying the entire down payment, the broker is able to reduce the risk of a default loan.

When you make an application for a mortgage, the rate you are quoted will be the rate for that day. These terms may not be the the same as those offered to you at settlement, weeks or months later.

In reaction to this problem, many lenders offer to lock in a rate for a certain length of time. They know that the time between deciding on shopping for a home and actually finding and closing on it may take some time. And since many people calculate how much mortgage they can pay for based the interest rate, they realize people want to maintain that rate. So a lock in period can be negotiated with your lender, which will keep the rate the same for a certain length of time. Lenders give lock in periods for both rates or points.

You have a lot of choices to make in purchasing a home and deciding upon a home loan, and in today’s confusing mortgage world, you now also have to choose the index that you want for your Adjustable Rate Mortgage (ARM).

The index of an ARM (Adjustable Rate Mortgage) is the underlying standard upon which the rate changes will be made. Indices can include the CD rate, the Treasury Bill rate, the Fed Funds rate, the LIBOR rate and, the newest.

First mortgages are obtained out when a home is first purchased, while second mortgages are taken out some time later, when the equity in the house has increased. Therefore, the purpose of the second mortgage is not to finance the purchase of the home.

Usually, homeowners will take out a second mortgage to undertake some renovations or improvements to the property, but increasingly, people are using the equity in their homes to reduce or eliminate their high rate credit card debt.

Everyone knows that the mortgage market is in turmoil, but there are still plenty of banks who are lending.

Small, regionally based lenders are still very actively granting home loans. This is not startling. Mortgage loans originated with the old building societies, like we see each year on “It’s a Wonderful Life”- taking Joe’s money to build Bob’s house. Though they may no longer be called building societies, this center of attention has protected them in the recent housing market turmoil.

They are actively granting loans to their customary clients and even expanding to pick up the slack where other banks are no longer active.

There are not a lot of varieties when it comes to mortgage insurance products. There is mortgage life insurance to guarantee that your home loan will be paid on the event of your death. You can choose decreasing or fixed term, based on the kind of mortgage you have. Disability mortgage insurance means the payment of the mortgage bill during a period of disability when you have no salary.

But behind the basic policies, there are some choices homeowners have to make in terms of their policies.

Three big factors determine how much you have to pay for mortgage insurance protection. For any given policy with all the same features, the premiums will be determined by the size of the mortgage, the age of the homeowner and whether or not he is a smoker.

Whether it is mortgage life insurance (insurance to pay off your home in the event of your death) or mortgage disability insurance (insurance that will pay your home loan if you are unable to work because of a disabling illness or accident we are talking about, the factors that fix the premium are the same.