There’s a lot of confusion over mortgage insurance, what it is and what it isn’t.

Some people think that mortgage insurance is the same as homeowners insurance. Sadly, the two aren’t synonymous. The popular opinion is that mortgage insurance is some ill-defined concept that bankers are billing you for just to get your money for no reason. Those with this sentiment are missing a few facts.

In the days before mortgage insurance, it was nearly impossible to get a mortgage with less than a 20 percent downpayment. This meant that many never got a chance at homeownership despite diligently saving money. Banks soon began to agree that if there were some sort of insurance policy protecting their interest in the mortgages they wrote, they might be willing to take a smaller down payment; thus opening up homeownership to a lot more people.

This is exactly how mortgage insurance works today. It protects banks and allows more people to buy homes—this is the primary benefit for homeowners. If it weren’t for some form of mortgage insurance, a bank would never agree to a mortgage for someone with as little as 3.5 percent down.

There are several entities that offer mortgage insurance. If you want to see which mortgage insurance is right for you, give us a call!



Conrad Smith
Your Real Estate Consultant
REALTOR®, BOLD, EcoBroker, CNE, CHRE, ILHM, KW Luxury 

Professional Denver Real Estate for the Urban at Heart