Legal Definitions - mortgage-guarantee insurance

Definition: Mortgage-guarantee insurance is a type of insurance provided by the Mortgage Guarantee Insurance Company to mortgage lenders. This insurance is granted to parties who have less than a 20% down payment. The cost of the insurance is included in the closing costs.

Example: Let's say you want to buy a house that costs $200,000. You have saved $30,000 for a down payment, which is only 15% of the total cost. The mortgage lender may require you to get mortgage-guarantee insurance to protect them in case you default on your loan. The cost of the insurance may be around $2,000, which will be added to your closing costs.

Explanation: This example illustrates how mortgage-guarantee insurance works. If you don't have enough money for a 20% down payment, the mortgage lender may require you to get this insurance. The insurance protects the lender in case you can't make your mortgage payments and default on your loan. The cost of the insurance is added to your closing costs, which is the amount of money you need to pay when you buy a house.