Are You Required to Get Mortgage Protection in Madison?

Mortgage protection and PMI are not the same thing

The names sound alike, so people mix them up all the time. PMI, or private mortgage insurance, is something your lender adds when you put down less than they want on a conventional loan. If you stop paying, PMI pays the lender back part of what it lost. Your family gets nothing from it.

Mortgage protection is a life insurance policy you choose to buy. If you die while the policy is in force, the money goes to the beneficiary you name. That person can use it to pay off the mortgage, keep up the monthly payments, or cover other bills. It is your family's money, not the bank's.

• PMI: set by the lender, protects the lender, usually built into your monthly payment
• Mortgage protection: your choice, protects your family, paid to your beneficiary
• PMI can usually come off once you build enough equity
• Mortgage protection stays in place for the term you pick, as long as premiums are paid

Do you need mortgage protection insurance?

Nobody needs it by rule. Whether you need it comes down to one plain question. If you died next year, could the people living in your house keep making the payment?

For a lot of families in Madison the answer is no. Two incomes cover the note, and losing one would mean selling the house or falling behind. That is where this coverage earns its keep. If you are single with no one depending on you, or you already carry enough life insurance to cover the loan, you may not need a separate policy at all.

We will tell you that straight. If the term life coverage you already own handles the mortgage, we will say so and not sell you a second policy.

Is removing PMI a good idea, and do you ever get it back?

In most cases, yes, getting rid of PMI is a good idea once your loan allows it. It costs you money every month and does nothing for your family. Ask your lender what equity level they need before they will drop it, and whether you have to request it in writing.

As for getting it back, PMI is generally not refunded. You paid for the lender's protection while it was in place, and that money is spent. Your lender can tell you the exact rules on your loan.

Here is the part people miss. When PMI comes off, your home still has a balance on it. Dropping PMI does not protect your family. Only life insurance does that.

What moves the cost of mortgage protection

We do not quote numbers in a blog post, because two neighbors on the same street can get very different prices. What we can tell you is what goes into the price, and we put all of it in writing before you decide.

You get a written quote that lists the coverage amount, the length of the term, the monthly premium, and anything extra you chose to add. No add-ons show up later that you did not ask for.

• Your age when the policy starts
• Your health and whether you use tobacco
• How much of the loan you want covered
• How many years of coverage you pick, often matched to your loan term
• Riders you add, if any

Mortgage protection or plain term life?

Many people cover the house with a regular term life policy instead of a product labeled mortgage protection. Both pay your beneficiary. The difference is mostly in how the coverage is set up and what it is meant for.

Some families want one policy sized to the loan and nothing else. Others want a bigger term policy that covers the house plus school costs and lost income. We lay out both side by side so you can compare. No pressure, no jargon. We explain every option and you decide on your timeline.