What is Mortgage Insurance?
Private Mortgage Insurance?
A Home Warranty?
There is a lot of confusion over this topic. First of all, "Mortgage Insurance" is sold by insurance companies. It is typically a "Term" policy, meaning it has no cash value. It is insurance only that will pay if you die to your beneficiary (person named on the policy).
This is often confused with "Private Mortgage Insurance" which is a policy for insurance paid by the borrower that protects lenders against some or most of the losses that can occur when a borrower defaults (does not pay) on a mortgage loan; mortgage insurance is required for borrowers with a down payment of less than 20 percent of the home's purchase price.
These are sometimes also confused with "Home Warranties". A home warranty is a contract purchased to cover the major components of your home such as:
plumbing, water heaters, air-conditioners, furnaces, etc. When these are in place, you call the company and they dispatch someone to fix the covered item. There is a small service fee charged to you (usually $50 - $60) for each service call.