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What You Must Know About Insurance When Buying a Home

What You Must Know About Insurance When Buying a HomeKirby Insurance

Compass Home Group
Call/Text 443-360-0086

Purchasing a home involves getting to know a lot of financial terms and processes that most first-time home buyers have never been exposed to. One of the most confusing is insurance. If you’ve never owned a home before, your familiarity with insurance most likely centers around auto insurance, health insurance, life insurance and, perhaps, renter’s insurance.

Even then, your level of familiarity may be minimal, if you are like most Americans. In fact, a mere 14 percent of those who have health insurance understand even the most basic insurance jargon, such as deductibles, co-payments and co-insurance, according to a study published in the Journal of Health Economics.

The various types of insurance required in the average real estate transaction are even less understood, so let’s take a look at them and get you up to speed.

Homeowners Insurance

You may hear homeowners insurance referred to as hazard insurance, but they are one and the same. Again, if you take out a mortgage to purchase the home, the lender will require that you purchase homeowners insurance.

While coverage varies, most policies cover fire damage or loss, theft, wind damage, hail damage, vandalism and more. Some perils aren’t typically covered, such as flood and earthquake damage, but there may be supplemental insurance that you can purchase to cover these hazards.

Your insurance agent can help you determine how much coverage you require, based on the loan amount and what it might cost to rebuild the home.  For a FREE valuation of your insurance needs, grab a FREE QUOTE NOW!

Payments to the insurance company are either kept in an escrow account sent in with your mortgage payment or the homeowner pays the premium on her own – it varies by insurer.

If you suffer a loss, the insurance company will typically make out the check to both you and the lender.

Private Mortgage Insurance

Private mortgage insurance is something most home buyers and homeowners would love to get rid of, but it’s a necessary evil. Without it, many buyers would not be given a mortgage and thus not be able to purchase a home.

PMI is required of borrowers whose down payment is less than 20 percent. Because these borrowers are considered higher risk, the lender needs assurance that it will get its money should the borrower default on the loan.

Read the entire article about What You Must Know About Insurance When Buying a Home here...

Compass Home Group of Keller Williams American Premier Realty
Tim Langhauser & Michele McCartin
Call or Text 443-360-0086 for information Broker: 443-512-0090
Get a FREE REPORT of your HOME’S VALUE at www.ListWithCompass.com

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The data relating to real estate for sale on this web site comes in part from the Metropolitan Regional Information Systems, Inc . Last Updated 08/22/2017. Portions Copyright © 2017 Metropolitan Regional Information Systems, Inc All rights reserved.