I am buying my first home. Should I buy mortgage insurance? Which one can take care of the property damage?

Question

I am going to buy my first house and since i have 20% down, I don't have to buy the private mortgage insurance. Since i am sure I will pay off my house within 5 years, my friend does not suggest me to waste money in the mortgage protection insurance. however, I would like to buy insurance to protect house damage, like fire. any suggestion? any idea about the price?

Answer 1

"Property protection" is part of homeowner's insurance and the lender will REQUIRE you to carry that.  Not sure what you mean by "mortgage protection insurance" - are you referring to life or disability protection?

Answer 2

If you owe more than 80% LTV ( loan to value ) on the property and it is a prime mortgage yes you will be required by your lender to carry it.

If its a subprime mortgage you wont be charged pmi because it will already be factored into your higher interest rate.

If your talking about homeowners insurance you will be required by your lender to have it  , and if you dont think its a good idea, thats not the correct answer. Fires, natuaral disaster, someone hurts themself on your property , these are things you cant control.

Answer 3

You are somewhat confused about assorted insurance coverage here.  PMI (private mortgage insurance) only is required in cases where you have less than roughly 20% down payment.  This insurance covers the mortgage lender in the event of your possible default.  It covers NOTHING for you.

You CAN purchase mortgage insurance which will pay off the entire amount due in the event of your death, or other policies which will cover your monthly payment in the event of disability which prevents you from working.

However, insurance to cover the actual premises will be REQUIRED by the mortgage lender, should the property fall victim to fire or other similar disasters.  Such coverage is generally called 'homeowner's insurance', and will protect you and your lender from catastrophic loss to the value of the premises.

Answer 4

There are number of options.

On mortgage protection insurance - there are two levels. One is life cover - if you have any dependents you may need to consider their ability to pay the mortgage should you die.

The other is protection against sickness or accident that stops you from working - again could you meet the payments if this happened. With the latter insurance be sure to buy a stand alone policy (moneysupermarket.com has a variety on offer if you're in the UK)

For insurance covering fire etc, you'll need a buildings and contents policy (some mortgages are mandatory that you buy buildings cover) This will ensure the structure and what's inside is protected. Here you'll need to check the value of items you can cover through the insurance aswell. SOme policies are more generous than others.

On price moneysupermarket makes it easy to compare prices quickly and easily - just remember to check what level of cover you get and any exclusions on the policy you choose to buy.

Answer 5

What you want is homeowners insurance, and yes you definately need it.  Ask your real estate agent for recommendations of people s/he works with.   And also, if your house is in an area that is likely to flood, you need separate flood insurance.

Answer 6

That is called homeowners insurance (a bank will call it hazard insurance).  Call a local independent agent to get quotes.  They will ask a lot of questions about you and your house.  Please call at least 2 weeks before the closing so if there is an underwriting issue (old wiring, underground oil tank, old roof, etc) it can be addressed before you close.

The price would depend on the area you live, the replacement value of the house (NOT market value), the age of the house, your credit score, etc.  So, you will not be able to get any type of price here.