What is mortgage insurance
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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing interactive tools and financial calculators, publishing original and objective content, and allowing you to conduct research and compare information for free, so you can make financial decisions with confidence.
Progressive home insurance
When disaster strikes, it's crucial that you're protected, especially when it comes to a large investment like your home. Before you close on a new home, you'll likely need to purchase home insurance to cover your property for potential damage.
Although you instinctively understand that home insurance is important, you may have many questions about what it is and how to get it. This article takes a deeper look at what home insurance covers and how much it costs, so you can better understand the type of protection available to you.
Home insurance, or simply homeowners insurance, covers loss and damage to your home, as well as the items inside it. The insurance usually covers the costs necessary to restore the original value of the home in the event of damage.
This insurance not only protects you, but also your lender. That's why, if you want to get a mortgage, your lender will often require proof that you've taken out home insurance before accessing your funds, and to ensure that you'll be able to cover any repair bills after a potential incident.
Proof of home insurance for mortgage
Home insurance (also known as home insurance) is not a luxury; it is a necessity. And not just because it protects your home and possessions from damage or theft. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of the property (usually the purchase price) and will not make a loan or finance a residential real estate transaction without proof.
You don't even have to be a homeowner to need insurance; Many landlords require their tenants to have renter's insurance. But whether it's required or not, it's smart to have this kind of protection. We will explain the basics of home insurance policies.
In case of damage due to fire, hurricane, lightning, vandalism or other covered catastrophes, your insurer will compensate you so that your house can be repaired or even completely rebuilt. Destruction or mutilation due to floods, earthquakes and poor home maintenance is not usually covered and you may need additional riders if you want that kind of protection. Detached garages, sheds or other structures on the property may also need separate coverage following the same guidelines as for the main home.
Can I pay for my home insurance myself?
You are required to show your lender proof of home insurance before they will hand over the keys to your property and finance your home loan. Until the home is paid off in full, the lender has a lien on the property, so it's in their interest to make sure the property is insured while the mortgage is paid off.
If you buy your new home with cash or an unsecured line of credit (credit card or personal loan), you will not be required to show proof of homeowners insurance before closing. Homeowners insurance is not required in any state, but you should consider purchasing it to protect the value of your home.
During the mortgage approval process, your loan specialist will tell you when to purchase home insurance. However, you can start buying a policy as soon as you have set your new address. Buying home insurance in advance gives you more time to select the right policy and find ways to save.
Although your lender may recommend a policy, it's a good practice to compare prices, coverages and consumer reviews before making a final decision. You can often save money by bundling your home and auto insurance with the same insurer or switching home insurance. Learn how to get the cheapest home insurance.
