Mortgage insurance is a type of insurance which a money lender can take in order to protect themselves from the risk of borrowers who do not make good their repayment on loans. In the event that the borrower does not make payment on the mortgage amount, the lender takes title to the property.

The lender’s mortgage insurer will reduces or eliminates the loss, which the lender incurs because the borrower has not paid up. Thus, mortgage insurance enables the lender to share the risk of borrowers defaulting on payments with a mortgage insurer. It is required to take mortgage insurance on mortgage wherein the borrower’s down payment is less than 20% of the purchased property’s value.

The premium amount which the lender has t pay on a mortgage insurance policy is passed on to their borrowers in the form of borrower’s fees, which becomes part of their monthly mortgage payment. Through mortgage insurance, a lender gains the benefit to make more loans than they otherwise could have done because older mortgages can be sold. Borrower’s benefit by an increase in their buying power. They can put less money down every month and purchase a home sooner when they pay the premiums charged for mortgage insurance.