Who Pays For Mortgage Insurance?
Depending on the location, insurance for mortgage loans may only be available through the housing authority, and not through a private entity. Either way, the policy is directly paid by the lender to the insuring party, but the cost is shouldered by the consumer, and in this case, the borrower.
The premium for the mortgage insurance is dependent on the amount of the down payment and is calculated as a percentage of the purchase price of the property. This percentage typically falls between 1.8 to 3.6 percent. If you are confused on the computation process, a professional broker can help explain it to you.
The amount may not be that intimidating when you first look at it but these little percentages can accumulate over time and can amount to thousands of dollars. You have the option to pay in bulk or have the monthly premium payments added to your monthly mortgage. Be aware, though, that there are locations that won’t allow including the premium in the monthly loan payments, so be prepared to pay the premium, in full.