As you are purchasing your home you will hear all kinds of terms from your realtor and loan officer referring to insurance: Title Insurance, Homeowners Insurance, Mortgage Insurance… and possibly more. So what are all these First Time Home Buyer Different Insurances ?
What do they all mean? What are the differences?
Wonder no longer. Here is what you need to know about the First Time Home Buyer Different Insurances
- – This is a common term used by a lot of mortgage lenders. It refers to insurance on the house itself. They call it hazard insurance because it is coverage against different “hazards” that could damage your home such as fire or wind. Your loan provider requires you to have this insurance to assure their asset is covered against these damages. Note that hazard insurance is not a separate coverage from homeowner’s insurance. If your lender tells you to get hazard insurance, then the homeowners policy you will be quoted by an insurance agent will meet their demands.
– Homeowners insurance does more than provide coverage for your house. It gives you protection for your possessions, detached structures such as sheds, personal liability, and a few other items. This is the type of policy you will most likely purchase to satisfy your lender’s requirements and protect yourself against some of life’s unknowns.
– This is insurance that protects the lender ( and optionally you) in the case of someone else trying to claim they own your land or if there are any problems with the title.
Private Mortgage Insurance
– This will usually come in to play if you are purchasing a home with less than a 20% down payment. It is an insurance policy that keeps the mortgage company from losing money if you foreclose on your home. You will often hear this called PMI.
Mortgage Protection Insurance
– Commonly known as MIPPI, this is basically life insurance that would pay off your mortgage in case of death or disability.
– If you are buying a condo or townhome that is part of an HOA you may or may not be required to purchase an HO-6 or Condo Insurance policy. Some lenders refer to this as a “Walls-In Policy.” Different states have different laws, and coverages provided in a condo insurance policy. If you need this insurance it is essential to get a copy of your HOA’s master insurance policy and have an insurance expert help you determine what insurance you need.
– Hazard or homeowners insurance policies do not provide coverage against flood. If the home you are buying is in a flood zone that the lender finds risky they will require that you purchase flood insurance. The same people helping you with your homeowners insurance can help you with flood insurance.
When buying a home, there are many new terms you’ll hear. There are lots of First Time Home Buyer Different Insurances . If you have questions about a policy type, or coverage need, make sure you ask. We love making sure our clients know what they’re getting and why they need it.
If you need further clarification or if you would like us or one of our great financial partners to help you find a good price for any of these policies, then just simply email us [email protected].
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