Archive for November, 2009

Is Mortgage Insurance Worth the Cost?

Posted November 11, 2009 by Bernz

When applying for a mortgage for your home or vacation home, it is likely that your bank or mortgage company will bring up the issue of mortgage insurance. In fact, they may even require that you take out a mortgage insurance policy. Mortgage is often explained by those who sell it as inexpensive insurance that will pay off the mortgage in the event of your death. That would free up your spouse’s remaining financial assets and reduce the burden on him or her.

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But is mortgage insurance really worth the cost? In order to make that assessment, it’s important to understand what it really is. Mortgage insurance is a form of life insurance. Unlike life insurance, however, whose proceeds can be used for any purpose, mortgage insurance only pays down the balance left outstanding on the mortgage at the time of death. There is no flexibility to use the proceeds for any other financial obligations.

A mortgage may be one of your largest financial debts and would likely be paid off with the proceeds of a life insurance policy anyway. There are a few differences between life insurance and mortgage insurance that make the former a better choice for insuring your mortgage. (more…)


Posted in Investing in Real Estate, Mortgage Insurance | 1 Comment »

Is Now the Right Time to Buy a House?

Posted November 2, 2009 by Bernz

The roller coaster ride that was the real estate market in the United States for the past year continues unabated in spite of federal efforts to bring some stability to the markets. Foreclosures across the country continue to rise and housing prices continue to fall. Mortgage rates are at historic lows, and that, coupled with low prices, is enticing many house seekers to consider dipping a toe back in the water.

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But is now a good time to buy a first home or to upgrade from your existing one? The answer is “it depends”. It may be a very long time before real estate once again becomes a solid investment strategy. The days of steady housing price increases we have seen over the last decade may even be over forever.

It’s important to separate out your investment goals from your need for shelter. The latter you will need no matter what form it takes: a house, an apartment or even a tent in the woods. Evaluating whether buying a house meets your need for shelter is a simple task of comparing it to the alternatives. How does the monthly mortgage payment compare to rental payments you would have to make on a leased property? What happens to rates when you have to renew the mortgage? What is the condition of the house (i.e. could it result in thousands of dollars in repairs)? What other expenses would you incur that you wouldn’t have to with renting?   (more…)

Posted in Investing in Real Estate | No Comments »


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