Rebalancing Beneficiaries Mortgage Insurance (RBMI)

When spouses separate either one party continues to reside in the matrimonial home or new residences are moved into. Frequently mortgages are discharged and new mortgages taken out. Traditional mortgage insurance is life insurance for the value of the outstanding mortgage at the start of the mortgage. The premiums paid for mortgage insurance typically are based on the initial amount of the mortgage. As the mortgage is paid down and equity increases, what happens if the mortgagor passes away? Mortgage insurance plays a crucial role in the housing market by broadening access to homeownership. It provides lenders with security, allowing them to approve loans, especially for individuals with lower down payments.  

Rebalancing Beneficiaries Mortgage Insurance (RBMI) is a life insurance policy that creates a Win/Win for the lender and the homeowner. For example: if the home or condo has a $500,000 mortgage, a $500,000 RBMI Policy can provide piece of mind for a homeowner. If the homeowner passes away, the mortgage amount owed can be paid to the lender and the remaining funds (difference between the original mortgage and the current mortgage) can be used by the beneficiaries. A Rebalancing Beneficiary Mortgage Schedule is attached to the Life Insurance Policy, providing legal direction to the Insurance Company. Traditional mortgage insurance can be purchased through banks and is expensive. The homeowner continues to pay monthly premiums for the full value of the mortgage. Having RBMI costs the same amount as traditional life insurance, but with the benefits of choosing the beneficiaries as the mortgage is paid.