What is Mortgage Insurance
Homeowners Insurance is something every homeowner will need. Mortgage lenders require homeowners insurance in order to protect their interests. In the event that the homeowner defaults on the loan (fails to pay the mortgage), homeowners insurance protects the lender's investment.
Homeowners insurance varies from county to county. Differences include the type of insurance needed and, of course, the insurance costs. For example, if you buy a home in an area where hurricanes are a concern, your homeowners insurance premium will likely be higher as a result.
You will need to get your insurance in place prior to the closing. In most cases, you'll need to show proof that the first year’s insurance premium has been paid.
How Much Mortgage Insurance?
The lender will require that the amount of the policy be at least as high as the amount of your mortgage, though most homeowners choose policies that cover the full replacement of their home and contents.
Finding an Insurance Provider
When researching homeowners insurance, you might want to start with the company that handles your other insurance needs. Often, insurance companies will offer discounts for customers that have multiple policies with them. Umbrella policies can cover all of your insurance needs while saving you money at the same time.
Your real estate agent or attorney should be able to tell you precisely what you need in terms of homeowners insurance. As soon as possible, you should verify that the insurance company has provided you with sufficient coverage to satisfy the lender.
Asking the Right Questions
When selecting homeowners insurance, speak candidly with the insurance representative and ask pointed questions. It's the only way to understand what the policy does and does not cover, and what options you have in terms of coverage.
The most important thing to remember about homeowners insurance is that it must, at the very least, meet the lender's requirements. Once you've met the bank's requirements, you can shape the policy to meet your own needs.
About the Author
Brandon Cornett is publisher of Home Buying Institute, the Internet's largest library of home buying advice. You can learn more about the home buying process by visiting http://www.homebuyinginstitute.com
