Find Out More About Mortgage Insurance In Canada

Dec. 9, 2010 - PRLog -- People are given advance credits to be able to invest in their private ownership of the existent fixed assets. The lender advances the money to acquirer of loan and that person has to pledge some of his assets as security. The acquirer of the loan receives the money as settled before and afterwards he repays the loan along interest. The interest rates may or may not vary over the loan life depending upon the type of the mortgage loan. If the loan is fixed rate mortgage, then the interest rate remains constant for the entire loan life, and if it is adjustable rate mortgage, the interest rates float in accordance with the market indices. The major characteristics of an advance sometimes fluctuate extensively; like the due period of advance, rate of interest and process of returning the advance. It is to be kept in mind that mortgage is not the debt on the borrower; it is the security interest of the mortgagee: http://www.canadabanks.net/Mortgages.aspx

Like indicated previously, the acquirer of loan pledges his assets as guarantee for the amount of money of the loaner, this suggests that in case the acquirer is unable to return the advance in the given period of time, the loaner has the authority to publically sell the pledged assets. Many a times the collateral is not enough to cover the lender's cost of funds; this is where mortgage Insurance comes.

Lender's Mortgage Insurance (LMI) is the insurance billed to lender as the security of his investments. It is the insurance to pay off the losses in case the borrower fails to repay the loan in the due time and the property set as collateral fails to cover the loss. The rates of mortgage insurance are particular too; generally $55 per month is charged for the credit of $100,000 and $1,500 per annum is charged for $200,000 credit.

There are two types of mortgage insurance; one is private mortgage insurance and other is public mortgage insurance: http://www.canadabanks.net/default.aspx?article=Mortgage+...

*   20% or less fee is required to be disbursed at time of acquiring loan for a private mortgage insurance and the rate of interest per annum varies. These charges may be paid on monthly basis, per annum basis, or they can be paid in lump sum or split payments.

*   Another type of insurance is called borrower-paid private mortgage insurance. Generally, any insurance company provides this insurance and like mentioned in the name, it is charged to the acquirer of the loan. This insurance though provides the borrower the mortgage without paying down the 20%.

*   Lenders-paid private mortgage insurance is the same as the BPMI but it is paid by the lender. Generally, LPMI is involved where insurance for high loan-to-value loans is not necessary.

*   Federal Housing Authority (FHA) offers the public mortgage insurance at receipt of 1.75% of advance amount . This amount is paid by the borrower.

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