When you default on a mortgage and the lender forecloses on your home, they incur legal fees to process the foreclosure and expenses associated with remarketing and reselling the home.
Because of mortgage insurance:
YOU CAN BUY A HOME WITH A LOW DOWN PAYMENT. Lenders wouldn’t be willing to take the risk on low- or no-down-payment loans without mortgage insurance. In many cases, that means you’d need at least a 20% down payment to buy a home, which would limit the number of people who could afford to purchase homes.
YOU CAN QUALIFY WITH LOWER CREDIT SCORES.Mortgage insurance allows lenders to make no- and low-down-payment loans to borrowers with scores below the 620 conventional minimum, which opens up more buying opportunities for credit-challenged homebuyers.