Step 8: Obtain Insurance
It is silly to think of driving a car without insurance, so the same goes for owning a home. No homeowner should be without homeowner’s insurance.
The main idea behind the different types of real estate insurance is to protect the owners if they find themselves in some type of unexpected tragedy. If something happens to go wrong, insurance can be the greatest decision ever made.
What type and what is the cost?
There are a few different forms of insurance related to home ownership, including the following four main types:
Title insurance: This type of insurance is bought at closing with a one-time fee and protects homeowners when the title to their property is found to be false or invalid. Title insurance includes “lenders” policies, which will protect the buyer up to the mortgage amount of the home. Also, it includes “owners” coverage, which protects the owner up to the purchase price of the property. In other words, the mortgage value and the amount of the down payment are protected by “owners” coverage.
Homeowners’ insurance: Fire, theft, and liability coverage are provided under homeowner’s insurance and lenders do require these policies. Surprisingly a number of different items can be covered by this type of insurance, such as wedding rings, home office equipment, and furniture.
Flood insurance: The federal government issues flood insurance and can supply as much as
$250,000 in coverage for single-family households and an additional $100,000 for contents. This insurance is usually required for homes in high-risk flood-prone areas. Speak with you realtor to find out which locations require such coverage.
Home warranties: If something goes wrong after the completion of a new home, buyers want the assurance that the builder will be available to them to make repairs. But what is the builder goes out of business or even refuses to do the necessary work?
If the home warranty is bought by the property from a third party, several forms of protection are generally provided. These can include mechanical defects such as wiring and plumbing for the first two years, workmanship for the first year, and structural problems for as much as ten years.
The home warranties for existing homes are usually bought by the seller and contain a one-year service agreement. The warranty company will make a repair or cover the cost of a repair in the event of a covered breakdown of defect.
Each insurance policy or warranty will have separate limitations and each individual program will have different types of deductibles, coverage, and costs. Speak with a realtor, home builder, or insurance broker today to find out all the necessary details.
Where should you look?
Home insurance is often supplied by realtors and insurance brokers also provide policies.
How does one obtain insurance?
The right time to get warranty coverage and insurance is at closing, so prior to closing make sure you talk with a realtor or insurance broker. During your meeting it is important to ask about costs, limitations, deductibles, and “endorsements” (further forms of coverage that may be accessible to you).
This article was brought to you by Oklahoma Mortgage Bank. Oklahoma Mortgage Bank offers a
wide array of mortgage programs to eligible borrowers nationwide.
If you or someone you know has questions about home financing in Oklahoma or nationwide,
contact our Oklahoma mortgage team: (405) 358-3560 or (800) 308-8503.