Understanding home insurance
When it comes to insurance, one size does not fit all. Check out the homeowner’s insurance tips and advice below. When buying a house through financing, the lender will require certain forms of insurance.
Required Homeowner Coverage
- Homeowner’s insurance -This is the most basic form of insurance for a homeowner. Typically, it offers coverage for fire, theft, vandalism and liability. Floods and earthquakes are not covered under this type of insurance. Carefully discuss what is and isn’t covered with your insurance agent. This can help prevent unpleasant surprises later.
- Title insurance-Offers protection against any lien or claim problems. Without title insurance, you could be responsible for the previous owner’s big-ticket purchase if he used his home as collateral.
- Private Mortgage Insurance (PMI) – This insurance protects lenders against loss if a borrower defaults. It’s required if you’re paying less than 20% for a typical home loan down payment with no government assistance. The amount is added into your monthly mortgage payments.