Mortgage Insurance

Mortgage insurance is a policy that protects lenders against borrowers who default or are unable to pay off their loans. It is usually optional in standard home loans, but required in non-conforming loans designed for high-risk borrowers. These include bad credit loans, 'low-doc' loans, and bridge loans. Mortgage insurance also ensures repayment in case the borrower's financial circumstances suddenly change, such as death, disability and involuntary unemployment. The borrower usually shoulders part or all of the premiums in a mortgage insurance, which significantly increases the total cost of the loan.