we have a daughter 19 years old would the house be covered
Total Comments: 1
Posted: Fri Jun 04, 2010 09:36 am Post Subject:
If you're talking about PMI/MIP, unless your daughter is your mortgage lender, she's not protected for anything.
MIP is added to all FHA loans -- and PMI is added to most conventional mortgages -- that are packaged for resale to GNMA/FNMA when the Loan-to-Value (LTV) ratio is higher than 80%. It's sole purpose is to protect the lender from financial loss due to the borrower's default.
After the "trustee's sale" on the courthouse steps, if the lender has not recovered their unpaid principal and related expenses, they file a claim against the PMI coverage for indemnification.
In a way, it would be like me offering you a $1,000,000 policy, having you make the payments, and requiring you to make me the beneficiary. Not exactly what you'd have in mind, right?
Funny how this form of "insurance" is so misunderstood and almost never explained. Maybe the first clue is that you don't get the policy.
If you are interested in "protecting" your daughter -- assuming that means leaving enough money that the home could be paid for after your death -- you should consider a first-to-die joint life policy between yourself and your spouse. Not matter who dies first, the policy pays the death benefit.
Can be done with any form of life insurance except "industrial".
Posted: Fri Jun 04, 2010 09:36 am Post Subject:
If you're talking about PMI/MIP, unless your daughter is your mortgage lender, she's not protected for anything.
MIP is added to all FHA loans -- and PMI is added to most conventional mortgages -- that are packaged for resale to GNMA/FNMA when the Loan-to-Value (LTV) ratio is higher than 80%. It's sole purpose is to protect the lender from financial loss due to the borrower's default.
After the "trustee's sale" on the courthouse steps, if the lender has not recovered their unpaid principal and related expenses, they file a claim against the PMI coverage for indemnification.
In a way, it would be like me offering you a $1,000,000 policy, having you make the payments, and requiring you to make me the beneficiary. Not exactly what you'd have in mind, right?
Funny how this form of "insurance" is so misunderstood and almost never explained. Maybe the first clue is that you don't get the policy.
If you are interested in "protecting" your daughter -- assuming that means leaving enough money that the home could be paid for after your death -- you should consider a first-to-die joint life policy between yourself and your spouse. Not matter who dies first, the policy pays the death benefit.
Can be done with any form of life insurance except "industrial".
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