Some of my mother-friends go to great lengths to equip their children with skills to deal with undesirable situations, like those in the movie Taken. It’s insane. Some of their kids could almost pass admission tests for FBI or CIA. They know where to kick a bad guy where it hurts. They know how to tell if someone is following them as they walk home from the MRT Station.
These mothers are practitioners in risk management. They like myself equip their kids with skills which they hope their kids do not have to use. They hope for the best, and prepare for the worst.
In the world of real estate, having mortgage insurance is like risk management.
There are numerous sites that provide sufficient information on mortgage insurance, like this.
I see mortgage insurance as a Get-Out-Of-Fail card, which protects the owner and his family from Fail situations which may result in a big reduction in the owner’s earning capacity. Yeah, no one plans to fail, but it’s good to know that the risks associated with those Fail situations are reduced to as low as practicable.
Most banks will offer mortgage insurance when you take up a loan with them. Yes, it’s another source of income for them, and you’re contributing towards the banker’s Porsche.
Some of our clients struggle with the decision to buy mortgage insurance.
“It’s not cheap!” they say.
But their perspective usually changes when we ask them, “can your family handle an outstanding loan of $1M, $2M, $5M if you are unable to earn an income?”
If your family can handle it, that’s great! For the rest of us, purchasing mortgage insurance is probably the wisest investment decision to make after the purchase of your property.