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Mortgage Insurance

Mortgage insurance is a contract that insures the lender against loss caused by a borrower's default on a mortgage. In other words, if you don't pay your mortgage, the insurance company protects the lender by paying a portion of the mortgage. This puts you in default, and this will have a serious impact on your credit rating. Most lenders generally require mortgage insurance for a loan that is greater than 80% if the value of the property. Mortgage insurance can be issued by a private company (like GE) or by a government agency (the Federal Housing Administration).