Obtaining the Best Price on Insurance Products Required by Mortgage Lenders

Lenders require mortgage borrowers to purchase title insurance that protects the lender. They also require that borrowers purchase homeowners insurance that protects both parties. And if the borrower purchases a house with less than 20% down, or refinances with less than 20% equity, the lender usually requires the purchase of mortgage insurance.
Mortgage insurance is always purchased from the insurer selected by the lender, while title insurance is usually purchased from a carrier selected by the lender or the Realtor. Since the selection of the carrier is aimed at generating benefits for the referrer, rather than at minimizing the price, borrowers generally pay more for mortgage insurance and title insurance than they would in properly functioning competitive markets.
To introduce an element of competition into these markets, the professor has invited MGIC to offer mortgage insurance, and Boston Financial to offer title insurance to borrowers on the site. Borrowers can price their offerings and compare them to the prices quoted by the companies recommended by their lenders. While lender and Realtor referrals are much less pervasive in the purchase of homeowners insurance, links are provided to companies offering homeowners insurance on line as a convenience.

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  4. Shop Prices That Are Always Current
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