I’ve been thinking a lot lately about our culture’s tendency toward bigger, more expensive, better. It’s easy to spot in the little things; overbuying at the supermarket and then needing to throw food away, buying clothes that you never wear. But more significantly, it’s also prevalent in the big things; buying an enormous five-bedroom house for a family of three, for example, that takes up vital resources (gas, electricity) in addition to costing a fortune.
Most of the world doesn’t live like that. And these days, most ofAmericacan’t afford it either. However, the particularly American dream of owning a home should still be achievable. The first thing to think about when buying a house (aside from the emotional considerations of making a home) is always the financial aspect.
If you’re one of the many people who can’t afford to put down the preferred 20% down payment, then you will be required by the lender to get mortgage insurance.
The Definition of Mortgage Insurance
Mortgage insurance (MI) is not the same as mortgage life insurance (which pays off a mortgage if the homeowner dies or becomes disabled) or homeowners’ insurance (which protects homeowners from loss due to theft, fire or other catastrophe). Private mortgage insurance, orPMI, protects the lender and investor from loss, not the borrower.
Mortgage Insurance Financial Benefits
As you consider all the facets of being a homeowner and how it will affect your financial well-being, consider this: MI is not only a requirement for people with less than 20% to put down, it’s actually affordable. One loan with mortgage insurance is often a lot cheaper than taking out two separate loans. In addition, there are tax benefits for both first-time and seasoned homeowners.
Additional Benefits to Mortgage Insurance
With some institutions, you can qualify for additional benefits and perks. Genworth Financial for example, offers job loss protection so that you can continue to make mortgage payments if you lose your job. In this economy, unfortunately, it may be the only way to prevent foreclosure. Mortgage insurance plans may also come with discounted offers and special rebates from well-known vendors such as Sears and Bed, Bath & Beyond so that you can get to the fun part of owning a home.
It’s a positive thing to buy a house and make it the home you always dreamed of. It’s something everyone should experience. But it’s important to make it happen within your means. Sometimes mortgage insurance is the only way homeownership will ever be possible.
So, what do you think? Would you buy a home with mortgage insurance or would you wait until you had your 20% saved?
This post was written by Clint from Genworth Financial.