In recent years, two powerful circumstances have come to affect the home buying market, causing some degree of internal conflict for buyers, particularly first time buyers.

First, the economy has been unstable, making employment, investments and other forms of income seem somewhat insecure. Home buyers often wonder how they'll make mortgage payments if they were to become unemployed, disabled or both. Second, mortgage rates and home prices have been low--in some cases historically low.

Why Mortgage Insurance?

Because of these two aspects of the financial climate, now may seem like the best possible or the worst possible time to buy a house. Agents, mortgage insurance providers and lenders are aware of this internal conflict. They're also aware that the prospect of home insurance or mortgage insurance may put these fears to rest, giving buyers the confidence they need to move forward.

Buying Home Insurance: Four Mortgage Insurance Tips

If you're one of these potential homeowners considering buying home insurance, here are a few mortgage insurance tips to keep in mind:

1. Know the types of mortgage insurance. Two types of mortgage insurance exist: The kind that will make payments to the lender if you default on your loan and the kind that will help you make your own mortgage payments and stay in the house if you lose your income.
2. Pick the right kind of mortgage insurance for your needs. The first type of mortgage insurance protects your lender, not you. You'll need to pay the premiums on this kind of mortgage insurance policy, and your lender will be protected from loss by the policy terms if you're unable to make your payments. But this kind of mortgage insurance can also benefit buyers, since it allows them to get higher loans than they'd otherwise be unable to secure. The second type of mortgage insurance may also be called mortgage disability insurance or job loss insurance. This kind of policy will cover a percentage of your mortgage payments if you lose your income, allowing you to keep your house until you recover from your disability or find a new job.
3. Make sure your understand your policy terms. Before buying home insurance of any kind, carefully read the terms of the policy and find out how your other existing insurance policies--such as a disability policy provided by your employer--will affect the terms of your coverage.
4. Take your time. Your lender and agent are financially motivated to provide you with the confidence you need to commit to a home purchase. Be cautious and don't allow yourself to be rushed or frightened into any kind of policy that may offer questionable benefits.