As previously stated, there are four vows we all make as mortgage holders, to our lender. The one that seldom gets attention, until the unthinkable happens, is fire or home insurance. No mortgage can be completed without it. What you need to be aware of, is how all insurance is not created equal. First of all, the insurance must satisfy the demands of the lender:
Home Insurance must be purchased to adequately protect your property against fire and other specified hazards. The policy must state that the property is insured for full value of the property, and payable to the specific lender of the mortgage. Home insurance must be in effect when you take possession of your real estate.
If you don’t insure your home and the lender does you will be taken advantage of. The premium will be higher, and it will only cover the cost of your outstanding mortgage. All of your belongings, the contents of your home, will not be insured.
What else can your insurance do for you, besides fulfilling your obligation to the lender? With adequate insurance, you will get full replacement value. This will include all of its contents, your possessions, if the tragedy has affected them. Your insurance should also fluctuate, as the value of your home increases over time; meaning that if your home is worth $250,000 today, but three years from now, the market has pushed it up to $276,000, you would be insured for the market value. Be aware that the cost of land is never included in the replacement value.
Discuss with your insurance broker the difference between broad and comprehensive insurance. Think of the unexpected, like hail damage, or rainbow Jell-O all over your living room carpet. Asking proactive questions now, can make any tragedy a lot less stressful later. Know how you’re protected, and breathe easy, if the unexpected wrecks havoc on your home!
Home or Fire Insurance is an unavoidable expense when purchasing a home. However, the premiums are variable, depending on whom you choose to purchase it from, and the amount of the deductible. Asking questions is the best way to find out what is logical for you!
Be sure to direct your questions about fire or home insurance to Elise. She’ll be happy to refer you to one of her trusted business partners, who can answer all of your home insurance questions.
Questions about your mortgage options? Give me a call!
Blogged by Elise Hildebrandt, AMP Mortgage Associate Broker Lic #316103 at The Mortgage Centre Brokerage Lic # 31547, Saskatoon. Elise has been in the financial industry for 16 years.