Streetsmart insurance Blog
After purchasing your home, you likely need to apply for a mortgage. But, a bank or creditor would need you to complete certain requirements before they allow you to borrow money from them. One particular requirement is to have homeowners insurance. This policy helps to protect your belongings and property.
What Is A Mortgage
Basically, a mortgage is an agreement between you and a lender. It states that you need to make repayments every month to avoid losing your property. After making your down payment, you own the title of the house, which is considered your initial payment for the mortgage. This down payment also makes the lender start paying off the seller of the property. It comprises about 3% to 20% of the cost of the house.
Your lender requires homeowners insurance to protect their investment as well as protect you too. Also, they do not want to lose out the remaining amount of mortgage in the event that your home is damaged due to a calamity.
In case you fail to repay the mortgage, the bank can resell or repossess your property. If you have no homeowners insurance, your lender would not get something if you cannot repay your mortgage or your house suffers from a catastrophe.
What Is The Minimum Amount Required
The minimum amount depends on several factors, including the age of your house, your location, and your lender. The main priority of your lender is to ensure that your property is completely covered. Therefore, you should purchase hazard insurance enough to cover the loan amount to the seller of the property.
There are other considerations regarding the coverage. Your lender may also require you to add hail and wind coverage if you reside in a tornado or hurricane-prone area. The same goes if you are located in a seismic or floodplain area.
The lender of your mortgage would want the dwelling coverage you buy to protect your property from the following risks:
If you want to close your mortgage fast, buy homeowners insurance now.
At StreetSmart Insurance, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (732) 462-8343. Get your free quote today by CLICKING HERE.