It’s common for lenders to require that a borrower purchase life insurance that will repay the loan in the event the borrower dies. This is not unreasonable, but be cautious if you are urged to purchase mortgage life insurance.

With mortgage life insurance, you pay a fixed premium for decreasing term life insurance. In other words, you will pay a certain amount per year for a policy that will pay off the balance of the loan, which is decreasing every time you make a payment.

Most borrowers will find that it’s far less expensive to buy a traditional term life policy and collaterally assign it to the lender than it is to buy mortgage life insurance, especially through the lender.

If the lender does not require insurance to collateralize the loan but you want to have it to protect your family or as part of a partnership agreement, shop around for the best deal.

Jackie