If you are considering buying a home in Houston and came to our Home Buyer’s Seminar last week, homeowners insurance is probably a term you are familiar with. Although potential homebuyer’s have heard many of the terms that go along with the process, we understand it can all be very overwhelming. In order to help simplify the process, we want to define one of our most frequently questions:
What is the difference between Homeowner’s Insurance and Private Mortgage Insurance (PMI)?
Homeowner’s insurance insures the home in case of casualty loss (fire, etc.). Windstorm insurance and flood insurance are also available and recommended in this area. Rates are very competitive, so it wise for the Buyer to shop.
Lenders require such insurance for any properties used as collateral for a loan and the insurance must be in place as of closing date.
Private mortgage insurance insures the lender against Buyer’s default. It is required for any Conventional Loan with less than a 20% down payment.
Mortgage life insurance is a term life insurance policy on the Borrowers that pay off the mortgage or a portion thereof should one or more of the Borrowers become deceased. It is not required and is often expensive. Regular term life insurance may be a better buy.
If you would like one of our realtors to assist with any questions you may have, please do not hesitate to contact us! You can find us on Facebook or call us at 713-964-4700.