What’s the Difference?
Mortgage Insurance vs. Creditor Insurance vs. House Insurance
If you're buying a home (or already own one), you've probably heard these terms tossed around—mortgage insurance, creditor insurance, and house insurance. But what do they actually mean? Here's a quick breakdown:
1. Mortgage Insurance (aka CMHC insurance):
This protects the lender if you default on your mortgage. It’s typically required when your down payment is less than 20%. It doesn’t protect you—it protects the lender.
2. Creditor Insurance (or Mortgage Life/Critical Illness/Disability Insurance):
This is optional and protects you and your family. If you pass away, become critically ill, or become disabled, it helps pay off your mortgage. It’s peace of mind coverage, but there are other options—ask a mortgage professional to compare.
3. House Insurance (Home/Property Insurance):
This protects the physical home and your belongings from damage, theft, fire, and more. It’s required by lenders before they’ll fund your mortgage.
In short:
• Mortgage insurance = protects the lender
• Creditor insurance = protects you
• House insurance = protects the property
Still not sure? ASK QUESTIONS! I'm available to help you work through any confusion you might have regarding this or anything to do with the mortgage process, all at no charge to you.
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