Mortgages seem to be getting larger and larger. Especially reading CNN Money. They've frequently got articles on the average price of real estate around the US.

I remember visiting a shopping mall kiosk in San Francisco in spring 2005 where the lowest price advertised for a house was $450,000. The real estate agent spoke of an interest only mortgage. This is where you could pay the interest only on the mortgage for a period of 5 years!! That was the first I had heard of anything like that.

Canada has some high priced real estate as well. Toronto, Calgary, Vancouver are some places where the average mortgages are $200,000+.

For most people, living on average incomes, these mortgages are pretty steep and scary. There are two options that you can insure your mortgage. 1) Mortgage life insurance and 2) a personal life insurance policy that would cover your mortgage.

MORTGAGE LIFE INSURANCE
Mortgage life insurance is generally offered by the bank and is based on coverage of the declining balance of the mortgage. This means that if you start off with a $250,000 mortgage, the coverage is for $250,000. As you pay down the mortgage the coverage will only match the outstanding mortgage amount. 10 years from now you may only owe $150,000 on the mortgage and that is what will be covered with mortgage life insurance.

PERSONAL LIFE INSURANCE
A personal term life insurance policy is different in that it holds the value of the coverage through out the term. example, you purchase a $250,000 policy to cover your current mortgage. The coverage stays at $250,000 throughout the life of your mortgage.

I believe that it's more cost effective over the long run to purchase a term life insurance policy and I'm going to do a little cost comparing over the next few days. I'll keep you posted.

For the moment I just wanted to make our readers aware that there is another option to Mortgage Life insurance as the lenders are offering it.

Articles from February 2006
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