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

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

---

Home Buying ? What Can You Afford?

Okay, you've decided to buy a home and are trying... Read More

Save Yourself from Homebuying Disasters

Whether you are a first time home buyer or a... Read More

Refinance Your Home Mortgage Online

The largest financial obligation most people ever take on couldn't... Read More

How Not To Be Ripped Off By Mortgage Brokers

One of the things that bothers me about the mortgage... Read More

Flexible Mortgage Tips

Outlined below are some useful flexible mortgage tips. The most... Read More

Home Equity Loan ? Not Just For Home Repairs, And Tax Deductible, Too!

Thanks to the combination of low interest rates and skyrocketing... Read More

Revive Mortgage Tenure With Extend Loan Term Remortgage

You are comfortably wedged in a mortgage deal, paying the... Read More

Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home Today!

So you have been through a bankruptcy and surely have... Read More

Home Loans For People With Bad Credit - When you Should Wait and When You Should Get a Home Loan

Home loans may seem like a bad idea for people... Read More

I Have A Slice of the American Dream and It is a 30 Year Nightmare

Well, we did it. We are buying a beautiful, brand... Read More

Home Loans: To Substantiate Financial Possibilities On Your Land

Availability of Home loans is in full bloom. They are... Read More

Buying a New Home ? Home Buying Tips

If you in the process of looking for your first... Read More

Home Equity Loan - Is It For You?

A Home equity loan has become an easy way to... Read More

Home Loans and Mortgages ? Beware of Deed Theft Scam

The average home in the United States has a value... Read More

Bridging Finance Basics

Bridging finance is a short-term loan that is used as... Read More

How to Use a Home Equity Line of Credit Calculator

Most home owners know that the lower the interest rate,... Read More

Refinancing Your Home - Is the Time Right?

Refinancing your home is a major decision not to be... Read More

The Mortgage Loan Application Online - Save Time & Money By Applying On The Internet

"You can save time and money by applying for a... Read More

Reverse Mortgages ? A Tax Free Income For Senior Citizens

I fully realize if it sounds too good to be... Read More

No Money Down Home Loan

Are you in the market to purchase a home but... Read More

The Power of a Home Equity Loan to Pay Down Debt

Households across the country are finding themselves in a similar... Read More

The Top 5 Reasons to Buy a Home

1. Save on your income tax.Yes, something good can come... Read More

6 Things to Consider Before Refinancing

Perhaps you're a homeowner in need of some quick cash.Maybe... Read More

What is a Capped Mortgage?

A capped mortgage is a variable rate mortgage with a... Read More

Internet & Mortgage Calculations

"You've been approved!" The words you have always wanted to... Read More

Gearing Up for Bad Credit Mortgages

Mortgage would have never happened, had mortgages been a no... Read More

Bad Credit? Qualify Yourself For A Zero Down Mortgage Loan

I decided to write this article today after closing a... Read More

Home Equity Loan Improvements

There's more Regulation Z compliance on the way, courtesy of... Read More

Applying Online For A Home Loan Can Give You an Instant Approval

"Instant Approval For Home Loans" is a common refrain for... Read More

What is a Mortgage?

A mortgage is a loan, usually from a bank, finance... Read More

Low Home Mortgage Interest Rate - Finding the Best Mortgage Rate

Interest rates are at an all time low, making now... Read More

Mortgage Reduction Solutions

USA ECONOMIC CONDITIONSToday's sluggish economy has left millions of people... Read More

How Much Interest is Your Home Equity Earning?

How much interest are you earning on your home equity?... Read More