YOU ASK:
What is the definition of Mortgage Guarantee Insurance?
WE ANSWER:
Mortgage Guarantee Insurance provides protection for a lender (in this case an institution who issues a mortgage) in case the borrower (the mortgage holder) is unable to pay for the loan.
When there is a mortgage loan default, the insurance will be the one that will cover the loan, up to the specified limit. Mortgage guarantee insurance may cover 20 to 50% of the mortgage amount. At times, this percentage can be higher.
This is also known as private mortgage insurance or PMI. Mortgage Guarantee Insurance is paid by either the lender or the borrower. However, those who want to avail of a mortgage are required to have this coverage first before a mortgage is written.
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