Rates are flat today. Stocks are rallying on hopes for a new round of Fed stimulus. Bonds, Gold and Oil are up as well. Comparison mortgage rates with no lender fees are 4.125% on a 30 year, 3.25% on a 15 year and 2.75% on a 5/1 ARM. Click here for more details.

Ed DeMarco, the acting director of FHFA, announced that Fannie and Freddie will raise their costs next year. Do you think raising the costs of financing with Fannie and Freddie will help drive more mortgages to the private sector? Let me know what you think in the comments section.

Today I answer a question from one viewer: “Do I need mortgage protection insurance?”

I got you covered in today’s episode:


(Watch it on your mobile phone or email reader here)

Here is the CNBC link to Ed DeMarco’s announcement about increasing Fannie and Freddie fees.

First, I’ll explain what mortgage protection insurance (MPI) is.

MPI is an insurance you can purchase for a monthly premium that will cover your mortgage payments if you become unemployed, sick, or disabled. It will also pay off your mortgage if you die.

Sound familiar?

It should! It’s very similar to a generic life insurance or disability policy. However, mortgage protection insurance comes with many restrictions, exclusions and waiting periods. If you have a pre-existing condition, this insurance will not cover you.

Do you need mortgage protection insurance?

Here is my general answer to this question: No!

It is more beneficial for most people to get regular life insurance and disability insurance from a trusted homeowners insurance agent or financial advisor. If nothing else, you should take the money you would pay for the MPI and set it aside for a rainy day.

One advantage to MPI is there are typically very few turndowns. They only require you to fill out the application, answer a few questions and pay a monthly fee.

If you have some major health concerns or work in a field with high risk of being injured (and disability insurance is not an affordable option), you may want to consider MPI. Make sure you shop around; don’t just sign up with a company that sent you an ad in the mail!

MPI is a protection for you by you. Private mortgage insurance (PMI) is a protection for your lender. Do not confuse the two.

Private mortgage insurance provides you with absolutely no coverage. It covers your lender if you ever default on your mortgage. Don’t assume that a PMI provides you with any protection.

If you thought this was good information or worth discussing, help me bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.

Let’s change the way people shop for a mortgageā€¦forever!

– Mike

PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002

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