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Do You Need Mortgage Protection Insurance?

December 9, 2014

If you’re taking out a mortgage on a home, there are certain questions you need to ask yourself and your lender. Taking care of all the details beforehand means you’ll have a reasonable, affordable mortgage that doesn’t involve large monthly payments. Here are the questions you need to ask:

1. What Is the Best Type of Loan for Me?

There are several different types of loans, and each one is suitable for a particular situation. Do you want a fixed-rate loan or an adjustable-rate loan? Are negative-amortization loans a good fit for you? Ask your lender what type of loan is best for you and why it suits your situation.

2. Do I Need Mortgage Protection Insurance?

Home mortgage protection is a type of life insurance that specifically covers mortgage payments in case the mortgage holder dies, is disabled or loses his or her job. This may be especially beneficial for younger individuals who haven’t had much time to build up savings and would be financially devastated by a job loss. Other homeowners may want it because they have health problems or work in high-risk occupations. Consider whether this is something that would make you feel more secure.

3. What Are All the Costs?

When considering a loan, you’ll have to cover not only the lender’s fee but also the costs of third-party vendors such as credit reports, appraisals, taxes, recording fees and, when applicable, escrow. Although the costs of all these vary depending on your situation, lenders are required to give you an estimate.

4. Can I Get Loan Rate Locks?

Interest rates change all the time. If you are concerned about your loan rates increasing significantly, ask your lender about locking your loan rate. This may cost an extra fee or last for a limited amount of time, so ask about the details before you decide on a loan rate lock.

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