| 1.
|
Fire
Insurance |
| |
You
must pre-pay a full year of fire insurance
premium in advance at closing into your
escrow account. This is called a "prepaid
item".
|
| |
| a.
|
Only
the structure is covered-no
contents |
| b.
|
Home
insurance premiums are rated
based on brick/frame construction
and zip code. |
|
| 2. |
Homeowners
Insurance |
| |
You
must pre-pay a full year of homeowner's
insurance premium in advance at closing
into your escrow account. This is called
a "prepaid item". |
| |
| a.
|
Replacement
-- replaces item at todays cost
|
| b.
|
Depreciated
-- gives depreciated value of
item |
| c.
|
Extended
coverage -- injury on property,
hail, frozen plumbing leak damage |
| d.
|
Personal
property items e.g. jewelry, guns,
stamps, collectibles |
| e.
|
Automatic
inflation coverage is possible |
| f.
|
Floods
are not included -- flood insurance
is separate |
|
| 3. |
Life
Insurance |
| |
| a.
|
Term
-- no cash build up. Cheap insurance.
This can be paid in annual payments
to your insurance agent. |
| b.
|
Credit
life insurance-decreasing term
life insurance. Equals the amount
of the outstanding loan balance.
Offered through lender or lender's
agent at a grossly inflated
cost vs. Level term insurance.
You are much better off obtaining
a term insurance policy from
your homeowners/automobile insurance
agent. The cost through them
is about one fifth of what your
mortgage lender will charge
you for the exact same coverage! |
|
| 4. |
Builder's
New Home Warranty |
| |
| a.
|
One
year from builder for all components
and labor.
|
| b.
|
5-year
footing and foundation warranty
from a soil engineer if there
is shrink-swell soil. |
| c.
|
10-year
extended warranty is possible
for structural defects that
make the home unsanitary or
unhabitable. The threshold that
requires correction is grossly
inadequate. Read the policy
before you buy the home to see
it is more for marketing and
public relations than of actual
value. |
| d.
|
There
is no charge for this insurance
to the purchaser |
|
| 5. |
American
Home Shield Resale Home Warranty |
| |
| a.
|
Is
it renewable? -- yes, annually
|
| b.
|
Cost
-- approximately $395.00 |
| c.
|
Coverage
-- one year coverage on mechanical
systems & appliances |
| d.
|
Deductible
-- $50.00 |
| e.
|
Designated
service representatives must
be used |
| f.
|
There
is no age restriction on homes |
g. |
Please
contact us for detailed information
regarding this outstanding insurance
program. |
|
| 6. |
Private
Mortgage Insurance (P.M.I.) is
required with any conventional loan
that has less than 20% down payment.
There is an up front charge for P.M.I.
at closing usually in the amount of
1-2% of the loan amount. In addition,
the purchaser pays an amount equal to
about one half of one percent to carry
P.M.I. on their home. Private mortgage
insurance insures the lender from loss
if you default on your house payment.
Can P.M.I. be waived down the road,
as my home becomes more valuable? Most
of the time, yes. The loan amount must
either be 80% of the original loan to
value or if the present loan to currently
appraised value is 75% or less. Make
sure to ask your lender to be sure you
know the terms.
P.M.I. can be avoided all together by
using 80-15-5 or 80-10-10 loan.
|
| 7. |
Mortgage
Insurance Premium (M.I.P.) is
required by the housing and urban development
(H.U.D.) on all federal housing administration
loans (F.H.A. loans). The M.I.P. original
cost and monthly cost is similar to
the P.M.I. on conventional loans, but
the mip never drops off the loan no
matter what the loan to value ratio
is. |
| 8. |
|
| |
Title
insurance is the only insurance you
get to protect you from the past! It
guarantees you that if anyone claims
to have an interest in your property,
they will defend the suit to "quiet
the title". |
| |
|
Who
Should I Choose to be My Insurance
Agent?
|
| a.
|
Keep
your present auto agent -- you
already know and trust him or
her! |
| b.
|
Multiple
policy discounts are available |
| c.
|
Get
your life insurance from your
own agent rather than your mortgage
company! |
|
