>I answered this in another post, but I'll explain a little bit >differently here. I see the mortgage insurance as insurance against >the borrower being UNABLE to pay back the money, not just choosing to >default.
Well you can see things however you wish, that is your prerogative. However, if you were in charge of deciding who gets what loan rates, that would be a very bad assumption to make. In a market economy, different borrowers can obtain different loan rates from lending institutions for one reason: they have different risks of defaulting on the loan, being late, or otherwise costing the bank money in getting payments on the loan. If a bank loses $200,000 on the loan, the moral state of the person who borrowed the loan has no effect on the bank's bottom line. Thus, loan rates reflect every reason for default. It is true that banks can misjudge these probabilities, markets, are uncertain, etc. People sometimes pay or less interest than they would if perfect knowledge was available. But, that is why different people and different companies are charged different rates. It's not just Brad and me that are saying that. It is also derivable from these two assumptions: banks compete for profitable loans and borrowers look for the best rate. Dan M. _______________________________________________ http://box535.bluehost.com/mailman/listinfo/brin-l_mccmedia.com
