Useful Links


Homeowners’ insurance: The mortgage connection

A home owners’ insurance is the cover for the house against natural calamities as well as liability. This covers the house and its contents but also other personal possessions which the house secures. The natural calamities include fires and winds. It covers thefts and vandalism as well. It is also called hazard insurance (http://www.mortgagefit.com/hazard-insurance.html)

It is not mandatory, like in the case of automobile insurance to have a homeowners’ insurance. But when one mortgages, the deed of trust or mortgage requires the collateral to be insured. This is because in the event of a default, the lender must not suffer. If in the time span the house gets damaged due to a wind or accident, the value on sale will decrease and thus the lender will not be able to get back the debt balance.

Why does the lender insist on a homeowner’s insurance?

Firstly, the lenders’ name or the mortgage company appears on the certificate of the insurance policy. The lender is categorized as a ‘loss payee’ or a mortgagee. This ensures that the lender is entitled to the insurance amount if the borrower defaults.

Secondly, the insurance premiums are paid little by little along with the monthly obligations or it is deposited in with impound or escrow account. In both cases the lender can earn the interest which is earned out of this amount. Moreover an escrow requires an amount much more than a single premium to fund the account.

The manner of payment of the insurance premiums differs from lender to lender. Some require that the insurance premiums be paid off in the first year after closing; while others will spread the same throughout the loan term.

What you should keep in mind before taking a homeowners’ insurance?

You should shop for an insurance agent extensively .You must go in for an insurance company which will make an honest evaluation of your home value.

This insurance is not only for a liability security it is important to the borrower as well especially if you aim for a refinance or a remortgage. The collateral remains the same .Thus you can still avail of a loan amount equal to the earlier mortgage amount if not more (due to appreciation).

For a detailed study of mortgage and such other terms you can log onto:
http://www.mortgagefit.com

About the Author

Smith has completed her Masters with a specialized paper in Mortgage.

More Insurance articles

Highly Recommended

 

Informative Articles

 

Recommended Resources

DO YOU HAVE A INSURANCE SITE?

Want to trade links? Learn more - click here

See our list of recommended resources - click here

Newsletter

Stay Updated!

Be the first to know when I add a helpful resource to this site. Join our "Insurance Updates" mailing list

Please type your name and email address into the box below and click on the "JOIN" button.

First Name:
E-mail Address:

We HATE spam. Your details will be kept strictly private and never shared with anyone. You may cancel your subscription at any time.


Useful Links



Products & Services





Opportunities

 

TURN YOUR INTEREST IN INSURANCE INTO A THRIVING ONLINE BUSINESS!

Learn More - CLICK HERE

 

 

Turn 21 Today!

 

Free Health Insurance Quote



 

Home  News  Articles  Links 

 

Material on this site is provided for information purposes only. It is not meant to be a substitute for professional advice. The information should not be used to diagnose or treat a health problem or disease, make investment and financial decisions, or to prescribe any medication. In case of doubt, promptly contact a qualified professional for advice.

 

Copyright © 1997-2006, All rights reserved. Privacy policy.

Text, graphics, and HTML code are protected by US and International Copyright Laws, and may not be copied, reprinted, published, translated, hosted, or otherwise distributed by any means without explicit permission. Legal notices

 

Guydz.com (TM)
2/28, O'Shanecky Street, VIC 3062
Fax : (612)-903 2671 E-mail : webmaster @ guydz.com
URL : http://www.Guydz.com/