FAQs: Insurance

What is mortgage insurance (MI)?

MI is required if you plan to make a down payment of less than 20% of the purchase price of the home. It is a type of financial guaranty that helps protect your Lender from losses, should you be unable to make mortgage payments and default on your loan.

Is mortgage insurance tax deductible?

Yes, however the deductable amount is based on the borrower’s income. Borrowers with incomes below $100,000 can deduct 100 percent of their MI payments. For borrowers with larger incomes, this deduction is reduced by 10 percent for every $1,000 over $100,000.

What is private mortgage insurance (PMI)?

Privately-owned companies provide PMI. These companies provide guidelines to Lenders that detail the types of loans they will insure and determine borrower eligibility.

What is homeowners insurance?

Homeowners insurance, also known as hazard insurance, is a policy that covers damages to your home, your belongings and accidents as outlined in your policy.

Is homeowners insurance required at closing?

Yes, proof of homeowners insurance will be required before you can close your home.