Insurance Costs for a Mortgage

Homeowner's Insurance
This insurance covers replacement costs for damages caused by fire, wind or other disaster that might affect the value of the property. Typically, the insurance also includes personal liability and theft coverage.  This insurance does not cover flood damage.  Talk to an insurance agent for further information. 

Flood or Quake Insurance (Florida does not require Quake Insurance)
Additional hazard insurance coverage that is required for homes located in a designated hazard zone as established by the Federal Emergency Management Agency (FEMA). An appraiser, inspector, or your realtor can let you know if a property resides in a hazard zone.  Florida has a wide variety of flood zones. 

Private Mortgage Insurance (PMI)
Insurance required for conventional mortgage loans when the borrower's down payment on the house is less than 20 percent of the loan value.  It does eventually drop off the mortgage after 8 years, or when the home has increased in value to 20% equity.  USDA 100% loans have a Mortgage Insurance Premium (MIP), and it also falls off after the value has increased to 20% equity.  FHA has a Mortgage Insurance Premium (MIP), but it stays on the loan forever.  VA has not mortgage insurance.

Title Insurance
This policy protects both the buyer and lender by insuring a clear chain of title. (In other words, it insures that that the person who sells the house has the legal right to do so.)  You are not required to purchase this according to the government, but it will be the best policy you ever purchased if there is a problem, in the past, or in the future, with regards to your title. 

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