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Posts Tagged ‘Homeowners Insurance’

Homeowners Liability Insurance and Its Advantages

Saturday, January 15th, 2011

In the society we live in people recur to lawsuits very often. Whenever the opportunity of receiving money from somebody occurs, a lawsuit is being intended. Under such circumstances, liability insurance becomes very important because it pays for potential expenses resulted from being sued. Homeowners insurance used to only cover for the property itself and the belonging in it in case they got damaged or destroyed.

Homeowners are responsible for the safety of whoever happens to be on their property. They are liable in case an accident happens and someone gets injured on their property. This is where homeowners liability insurance comes in. This is useful even before the building is actually done because the owner is also liable for any accident that might take place while the house is being built. Even though it might sound unbelievable, as homeowner, you are also responsible for the safety of trespassers.

Homeowners liability insurance can cover for personal or medical expenses. The first type will protect you in case someone who was injured or who had personal property destroyed on your property sues you. It will cover for the money you spend on your defense, if it comes to this. The second type of homeowners liability insurance, the medical one, will pay for the medical expenses of the person who got injured on your property. This usually includes everything from hospitalization days to treatments and medical investigations.

Those looking for homeowners liability insurance should also check the companies which offer “umbrella” liability insurance. This offers extra coverage than basic liability insurance policies and provides you more protection. Don’t dismiss it because you think it’s expensive, because you can buy it at very good rates.

When you sign these policies, you don’t determine the type of coverage that you need by taking into consideration the value of your property and assets. This is of no importance because the amount of money that you will owe is going to be established in court, by a judge, and you have to pay it even if it’s more than the value of your belongings.

Lenders Often Require Mortgage Loan Insurance

Wednesday, April 7th, 2010

A mortgage loan insurance policy is designed to protect the lender in case of default on the part of the purchaser.

Twenty percent down is a safe minimum

In cases where the home buyer makes less than a twenty percent down payment on their home, an insurance policy guarantees the lenders money is safe and they will regain at least part of the money they loaned if the buyer fails to pay or defaults on the loan. This same mortgage loan insurance is beneficial to the borrower as it allows them to not be required to pay as much. Typically a down payment is required to be at least twenty percent of the total of the loan, but some instances can be as low as five percent. The lower limit will be dependent upon the borrower having excellent credit and the borrower being willing to “cover” the difference through an insurance policy.

Pay more rather than less

There is no doubt that the more a borrower can afford to put down on a home, the less they will need to repay in the form of mortgage payments. Lenders, who offer fifteen year mortgages (rather than thirty years), will benefit from having the amount they have loaned returned far more quickly and borrowers will pay far less in interest over that period of time, plus have that home free and clear in half the time. In cases where at least twenty percent is paid down and the mortgage is secured by a fifteen year loan, the mortgage loan insurance may be substantially lower.

Mortgage loan insurance can be paid two ways

Typically mortgage loan insurance is included as part of the monthly mortgage payment or it may be considered a separate loan which requires a separate payment which can be made monthly, annually, or in a lump sum. Borrowers usually prefer to incorporate it into their monthly payment although it means they must pay on that insurance policy for the lifetime of the loan. The average cost of mortgage insurance ranges from one and a half percent to around six percent of the principal of that loan, and this is considered a tax deduction for the borrower.

Mortgage loan insurance protects lenders against defaulting borrowers

When the lender has mortgage loan insurance they will not need to worry about losing their money if the borrower defaults on the loan. This insurance can be public or private and that depends upon the insurer. Also known as a mortgage indemnity guarantee, this form of insurance pays the amount agreed upon in the policy, generally around twenty five percent. The buyer has another option if they can only offer less than twenty percent down and that is to borrow additional funds, sometimes called a second mortgage or a piggy back loan.

The use of borrow paid private mortgage insurance or BPMI allows borrows to obtain a home while paying less than twenty percent down. It is all to enable home ownership and is for the benefit of all parties concerned.