Congratulations: you’re buying that property you’ve always dreamed of! Now, you’re researching all the kinds of insurance policies you may — or may not — need to purchase. At first, this task can feel overwhelming. So, with the myriad of options available, what sort of home insurance policies do you really need?
The best home insurance companies (like ours) will help you navigate:
Homeowners insurance covers your property and personal belongings against some disasters like fire or wind damage and even covers theft. Your lender will usually require proof that you have a policy.
If you no longer have a mortgage, homeowners insurance remains important since your home is likely your largest asset. Maintain some coverage on your personal belongings for disasters. You may still want to retain a policy for personal liability issues in case someone ever gets hurt on your property or property damage occurs.
Private Mortgage Insurance (PMI)
Are you buying a home using a conventional mortgage without putting 20 percent down? Then, you will likely have Private Mortgage Insurance. This policy protects your lender in case you fail to make payments or if you can’t fully pay back your conventional loan.
Under the Homeowners Protection Act, most borrowers will find that the PMI will be automatically removed from mortgage payments once your loan-to-value ratio becomes 78 percent. PMI is also automatically canceled once you’ve reached the half-way point (i.e. 15 years’ worth of payments have been completed on a 30-year home loan).
There are two types of title insurance policies:
- Lender’s Title Insurance: When you take out a mortgage loan, the Lender’s Title (also known as a “loan policy”) is purchased with a one-time fee via closing costs. The fee is based on the loan’s amount. (A Lender’s Title will be a fee during refinancing, too.) A title company does a search on the property to uncover possible discrepancies in regard to issues encompassing encumbrances, easements, liens, etc.
- Owner’s Title Insurance: Owner’s Title Insurance offers further protection for the owner for peace of mind. It only needs to be purchased once through the best home insurance companies (like ours), and its cost will be based on your home’s purchase price.
Homeowners insurance doesn’t usually cover flooding. According to the Federal Emergency Management Agency (FEMA), “You can buy federal flood insurance no matter where you live if your community participates in the NFIP (National Flood Insurance Program). The NFIP was created in 1968 to provide flood insurance to people who live in areas with the greatest risk of flooding, called Special Flood Hazard Areas (SFHAs), also known as the 100-year floodplain, or the regulatory floodplain.”
However, flooding can happen anywhere. Homeowners can purchase flood insurance no matter where their property is (if their community participates in the NFIP).
Buy from the Best Home Insurance Companies
There are so many types of insurance available! But the best home insurance companies like Narvaez Insurance know exactly what sort of policies you really need. Call today!