Mortgage Guarantee Insurance
What Does Mortgage Guarantee Insurance Mean?
Mortgage guarantee insurance is a policy designed to protect a mortgage lender if a borrower is unable to repay their loan or fulfill other contractual obligations related to the loan.
The cost of this insurance may be included in the loan or purchased separately from an insurer independent of the lender.
It is also referred to as mortgage insurance.
Insuranceopedia Explains Mortgage Guarantee Insurance
In the U.S., lending institutions such as banks may require individuals seeking home financing with a down payment of less than 20% of the property’s value to purchase mortgage guarantee insurance.
Once the borrower has paid off more than 20% of the loan, they can request the lender to cancel the insurance.
The lender may either include the insurance as part of the loan, rolling the cost into the loan payments, or the borrower can purchase a policy directly from an insurance company.
