Planning to buy your own house? There are a lot of checkboxes that need to be checked before you can actually shift to your new home. And one of the most confusing amongst the lot can be home insurance. There is a certain type of insurance that is mandatory and few are optional. Read below on different types of insurance that the experts want homeowners to have.
1. Home Insurance
While home insurance is not a legal mandate, it is highly advisable because it is almost impossible to get a mortgage without home insurance in place. Also, buying your home is one of your biggest investments and why would you want it to be unprotected. Home insurance covers the rebuilding of your house, garages, detached structures, and liability if anyone des get hurt on your property. However, beware standard policies may not include things like earthquakes, termite damage, or any flooding. If you think these are applicable to your home, you should consider looking at additional coverage. The overall cost of the insurance varies depending on coverage home value and additional factors
2. Condo Insurance
If you own a condo and think that the condo’s corporation commercial condo insurance covers your condo unit too, you are incorrect. Corporation commercial condo insurance is only limited to certain common areas of the entire condo-like building structure, exterior, and shared spaces like the lobby or elevators. You will need to buy a condo policy to cover your condo unit, its upgrades, and its contents. However, personal condo insurance is not a legal mandate but most lenders consider this as mandatory. As an example, consider flooding in your condo unit as a result of a plumbing problem, all belongings were ruined. Once the units were repaired (owing to corporation commercial condo insurance), the owners got an empty unit with four drywalls. With property insurance, the owner could have got the condo unit back to how it was. Just replying on the condo’s insurance is detrimental. Paying $20 or $30 a month can go on to save you tens of thousands of dollars. The actual value of the insurance depends on condo value, coverage, and other additional factors
3. Title Insurance
A property’s title is the legal proof of its ownership. Whenever you buy a new house, the previous owner signs the deed over to you. Title Insurance plays a very important role here as it protects you against all challenges to your ownership – like issues relating to your home title, unpaid liens, fraud, encroachment issues, and other issues that could prevent you from selling, leasing, or mortgaging your property. Similar to Condo and Home insurance this is also highly advisable and most lenders require it for financing. The cost would generally be in the range of $225-$325 depending on the value and location of the property
4. Mortgage Default Insurance
Mortgage Insurance is mandatory on all high ratio mortgages. High Ratio mortgages are referred to as mortgages that have down payment of less than 20%. This insurance protects lenders in return for qualifying borrowers with as little as 5% down payment. Without Mortgage Insurance, owning a home would be impossible without making a sizeable amount of down payment. The cost usually ranges between 2.8% to 4% of the mortgage amount.