High Ratio insurance is typically required by lenders when homebuyers have a down payment of less than 20% of the purchase price of the property. However, a lender may still require that you get mortgage loan insurance, even if you have a 20% down payment, dependent on your credit history or employment status. This insurance protects the lender and not the homebuyer. The amount of insurance premium is based on the loan-to-value ratio (mortgage loan amount divided by the purchase price). The bigger your down payment is the smaller the premium will be. It can be paid in a single lump sum to added to your mortgage amount and included in your monthly payments. It’s a very good solution for new homeowners who have a stable income and good credit but do not have enough money for a large down payment.
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