MORTGAGE INSURANCE AS A TOOL TO MAKE MORTGAGES MORE AFFORDABLE

Abstract

Nowadays, it is impossible to take out a mortgage without Private Mortgage Insurance. However, it is not obligatory for the borrower to insure against all the risks suggested by the bank. According to the existing Russian legislation when you get a mortgage, you are required to insure the mortgage property only against its destruction. Nevertheless, most of the mortgage banks require life, casualty and title insurance as a compulsory insurance that borrowers must purchase. Certain banks offer their borrowers either to pay life and casualty insurance or to pay increased mortgage interest rates. Sometimes the banks even put forward supplementary terms and conditions. As a result, mortgage loan expenditures may significantly exceed the premium rates. Therefore, most of the borrowers prefer to make the mortgage insurance contract and apply to the insurance companies.