When does an applicant typically apply for mortgage insurance?

An applicant typically applies for mortgage insurance at the same time they apply for the mortgage loan because mortgage insurance is often a requirement for borrowers who are putting down a smaller down payment, generally less than 20% of the property’s purchase price. Lenders need to assess the risk of lending to the borrower, and having mortgage insurance enables them to mitigate that risk in case of default.

Applying simultaneously allows the underwriting process for both the mortgage and the insurance to proceed in tandem, which can streamline the approval process and ensure that all necessary financial assessments are made right from the beginning. This timing helps the lender and the borrower understand the full financial picture and obligations associated with the loan, ensuring that all requirements are met before moving forward with the purchase.

Other options suggest different points in the process where an applicant might apply for mortgage insurance. For example, applying after approval or prior to closing would typically not align with how mortgage processes are structured, as lead times for underwriting and insurance can be quite important. Additionally, only applying when requested by the lender would not reflect the usual practice, since mortgage insurance is generally determined early in the loan application process.