Is Homeowner’s Insurance Required?
Earthquake insurance is not required for a mortgage. You can shop around for the best policy and price on homeowners insurance. Some lenders may have recommendations for or relationships with homeowners insurance providers. VA borrowers will usually need to pay their first year’s insurance premium at or before closing.
Minimum home insurance levels. States have standard minimum auto insurance requirements, but it’s not that easy for home insurance.. As we mentioned, states don’t require home insurance if you paid off your home. mortgage lenders require dwelling and liability coverage if you have a mortgage, but the actual minimums depend on state law and company policy.
Specific Requirements. Depending on the type of mortgage you have, the lender may have specific homeowner’s insurance requirements. Fannie Mae requires that all homeowner’s policies cover hurricane, hail and wind damages, and does not accept policies that impose any limits or exclusions on this type of coverage.
Homeowner’s insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary. When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance.
After you pay off your mortgage, you aren’t required to have home insurance. However, you should keep your home insurance policy active to avoid risking what you’ve invested in your home. If you purchase a condominium or co-op, your board may require you to buy condo insurance or home insurance. Be sure to check with your board to see what type of policy is required.
Require the borrower to obtain appropriate endorsements that will bring the coverage in line with Fannie Mae’s requirements if the existing property insurance policy does not provide the amount of coverage Fannie Mae requires and send a copy of these endorsements to the servicer of the first-lien mortgage loan.
Unlike car insurance, which is required by law, homeowners insurance is not. However (and this is a pretty big however), most mortgage lenders will require some basic form of homeowners insurance. Think of it this way: your mortgage lender is kind of a joint homeowner with you.