If you're thinking about buying a house one of the many details you also need to consider is mortgage insurance. What this specialized insurance is and how it affects your loan and costs is very important and yet equally detailed.

Mortgage insurance covers the home loan so that if the consumer defaults then the bank, savings and loan association, credit union, mortgage company or other lender is paid by this policy. This excludes personal loans like those from family and friends.

By taking out mortgage insurance you get more flexibility in the dollar amount of your loan since the bank or lender has less liability. This is especially so if you don't have a large amount of money for the down payment. The downside of this is that your bank generally only works with one insurer so you don't have much choice in the premium rates. If your bank or lender will allow you to shop for mortgage insurance independently then your options are much better. Of course your bank will require documentation of this coverage but it could be cost saving and a better option for you. Many nationally known insurers offer this coverage so finding a competitive rate shouldn't be too difficult, just a bit time consuming.

Other considerations with mortgage insurance and their rates are: length of coverage – ten years at a higher rate and drop the rate for the last five years, what portion of the home's value you are insuring – 80% versus higher, length of mortgage, etc. All these and more detailed information like the history of mortgage insurance and Congressional legislation are covered on mtgprofessor.com and other sites like ask Jeeves. They may even have a handy mortgage insurance calculator.

There are so many details to consider when purchasing this insurance but, as with many other things in life, mortgage insurance is a necessary evil.

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