YOU ASK:

Do you have to use the mortgage insurance the lender provides?

WE ANSWER:

If you don't have the necessary credit rating or a sufficient deposit amount (20% of the home's value), then the mortgage insurance company will require that you become covered with mortgage insurance. And, even if you're the one who's paying for the mortgage insurance premiums, they usually get to choose which mortgage insurance company to go to.

One reason that gives the lender the prerogative on which institution to go to is that it is the lender's interests that is being protected, and not the borrower's.

You may ask what's in it for you if you're the one who's paying and it's the lender that's being protected. Well, it gives you the privilege of starting the purchase of your home even if all you can afford is a down payment is less than 20% of the value of the home or the purchase price (whichever is lower). With private mortgage insurance, you can buy a home for as low as 3.5% as your down payment!

You can consult your lender about this, as there are also additional considerations when it comes to the requirement of the state.

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