What Is Mortgage Insurance? | Luis Cuevas Realtor® | RE/MAX Cross Country

Often confused is the term mortgage insurance.  Many people think it is an insurance that pays off your mortgage if you die?  Others think it is an insurance that makes your mortgage payment if you are out of work?  The reality is neither of these are the case.  So what is mortgage insurance?

Mortgage insurance is that monthly payment that is sneaked in to your mortgage every month.  It isn’t home insurance, taxes or going to pay the loan… so then what is it?  

Mortgage insurance is an insurance that you pay for that protects the lender in case you get foreclosed on, which helps them recuperate their money.  Let’s break that down.  The insurance pays the lender if after they have to sell the home they are still short what they were owed.  So this product protects the lender and not you.

Mortgage insurance is required when you are financing more than 80% of the value of the property your are purchasing.  20% is the cushion the lender feels comfortable issuing a loan with out this insurance.  However if you finance more than 80% that is how you end up with the mortgage insurance.

How do you avoid paying it, well put 20% down or get two loans one for 80% & the other for 20%.  Sure there are pros and cons to this but this would help you avoid it all together.

Again just know this is a normal insurance I see all the time, it is just a byproduct of not putting a big down payment.  If you go to purchase a home putting a large down payment is an incentive to the lender and you so this isn’t having to be paid because otherwise it is a waste of money to you.

With the heart of a teacher I strive to educate my clients so they can be better informed.  I strongly believe an informed consumer makes better decisions and are less likely to be taken advantage of.

Have questions about this or other topics, don not hesitate to contact me.

Don’t forget to “LIKE” this video and be sure to Subscribe to my YouTube Channel as well.

Luis Cuevas, Realtor®

RE/MAX Cross Country

1990 Justin Road

Highland Village, Texas 75077

(214) 783-0535


Check out my website for more helpful tips:


Subscribe to my YouTube Channel:


Follow me on Facebook: