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Mortgage Insurance: Canada Gives You A Choice

By Deborah R. Cevallos

For those wanting to buy a residence, the Canadian housing finance system has made it possible to do so without paying the entire down payment. Borrowers will be able to get the interest rate of a 20% loan while only paying at least 5% on your down payment. How is this possible? The obligation of purchasing mortgage insurance on the amount borrowed makes it possible for this to happen. This reduces risk from the mortgage for the broker and enables you to buy a home without having to front the entire down payment.

Who Qualifies?

However, not everyone will be able to get mortgage insurance; there are some requirements to qualify. The residence needs to be in Canada to meet the first requirement. For single-family and two-unit homes, you must have a down payment of at least 5%, and at least 10% on three- or four-unit dwellings. The money down needs to come from your own resources, but it is acceptable for an immediate relative to contribution you the money. The mortgage principle, interest on the loan, property taxes, heat bill, the annual site lease in case of household tenure, and 50% of applicable condominium fees should make up only 32% of your gross household earnings as another qualifier. Also, to qualify for the mortgage insurance, your debt load should not be more than 40% of your gross household earnings. The amount of closing costs and fees can also play a roll in deciding your eligibility for mortgage insurance.

So, whats the cost?

To obtain mortgage insurance, the broker pays an insurance premium. Yes, the mortgage company is the one who pays the premium, but believe me; they will pass the expense on to you. Does mortgage insurance cost a lot? It depends on who you talk to. There is a direct correlation between the amount borrowed and the cost of mortgage insurance. Your insurance gets higher the more money you borrow. This helps buyers who pay more for a down payment. You can even pay the insurance premium in diverse ways. The premium can be paid in a lump sum or can be added into your mortgage payments and be paid monthly. You are not safe just because you purchased mortgage insurance if your loan is defaulted. Insurance for the borrowed mortgage reduces risk for the lender. On the plus side, it enables you to buy a property you were not otherwise able to buy. Go to www.infoprimes.com and save on mortgage insurance. Summary: The Canadian housing finance system has made it possible for home buyers to buy a property without a full down payment while reducing the risk for the mortgage company. For those that qualify, borrowers are able to purchase mortgage insurance for the amount borrowed.

Canada Offers Mortgage Insurance, Should You Go For It?

The Canadian housing finance system has made it possible for you to buy a residence in Canada even if you are not able to save enough for the down payment. You will be able to get the interest rate of a 20% loan while only paying at least 5% on your down payment. How can this be? This is made possible by buying mortgage insurance for the amount borrowed on the loan. While you are able to get a residence without paying the entire down payment, the lender is able to reduce the risk of a default loan.

What are the Requirements?

However, not all home buyers will be able to get mortgage insurance; there are some requirements to qualify. To qualify, the property, of course, must be in Canada. For single-family and two-unit homes, you must have a down payment of at least 5%, and at least 10% on three- or four-unit homes. The money down must come from your own recourses, but a donation from an immediate relative is acceptable. An additional qualifier is that 32% of your gross household income is comprised of your principle, interest, property taxes, heat bill, the annual site lease in case of household tenure, and 50% of applicable condominium fees. An additional qualifier for loan insurance is your debt load should not be more than 40% of your gross household earnings. The amount of closing costs and fees can also determine if you qualify for mortgage insurance.

How much does it cost?

The mortgage company pays the insurance premium to obtain loan insurance. Yes, the mortgage company is the one who pays the premium, but believe me; they will pass the cost on to you. Does mortgage insurance cost a lot? Well, the answer varies. The amount of the mortgage is directly connected with the price of the insurance. The less you borrow, the less your insurance will cost. This helps buyers who pay more for a down payment. Buyers can even pay the insurance premium in diverse ways. The premium can be paid in a lump sum or can be added into your mortgage expenses and be paid monthly. If you default on your loan, the loan insurance does not keep you safe. It just insures the lender on the amount you borrowed. On the bright side, you got to purchase a home with little money down and a good interest rate. See us at www.infoprimes.com to see how you can save on loan insurance rates.

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Article Citation
MLA Style Citation:
Cevallos, Deborah R. "Mortgage Insurance: Canada Gives You A Choice." Mortgage Insurance: Canada Gives You A Choice. 7 Jul. 2010. uberarticles.com. 12 Feb 2016 <http://uberarticles.com/business/mortgage-insurance-canada-gives-you-a-choice/>.

APA Style Citation:
Cevallos, D (2010, July 7). Mortgage Insurance: Canada Gives You A Choice. Retrieved February 12, 2016, from http://uberarticles.com/business/mortgage-insurance-canada-gives-you-a-choice/

Chicago Style Citation:
Cevallos, Deborah R. "Mortgage Insurance: Canada Gives You A Choice" uberarticles.com. http://uberarticles.com/business/mortgage-insurance-canada-gives-you-a-choice/


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