Insurance 101
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Upon Further Inspection
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The Closing Procedure
Title Insurance
When property is sold or refinanced, the lender and buyer need a preliminary title commitment that will indicate what recorded liens, encumbrances and easements are currently in effect on the property, the vested owner of record and any restriction on use of the subject property. Title Insurance is required on all property in Kansas, and the cost is usually split between Buyer and Seller. In addition, the buyer is also required to furnish the lender with a lender's policy showing the lender as a lien holder on that property - charges are part of the closing costs. When the sale is final, the title insurance company will record the necessary documents and will issue a title insurance policy to the new Buyer and the lender showing marketable title to the property.
Mortgage Insurance
Mortgage insurance covers part of the lender's risk on high-ratio loan-to-value loans. It protects the lender from loss due to payment default by the borrower. With this insurance protection, the lender is willing to make a larger loan, thus reducing your down payment requirements. This type of insurance should not be confused with mortgage life, credit life or disability insurance designed to pay off a mortgage in the event of physical disability or death of the borrower.
Homeowners Insurance
This insurance protects you and the lender against loss due to fire, windstorm and natural hazards. Lenders usually require the first year premium plus two months to be paid in advance. In some instances the lender may also require flood insurance at an additional charge.
Home Warranty Policy
This policy will protect the Buyer against many repairs or replacement of certain appliances and heating, air conditioning, plumbing or electrical systems, due to problems that were not preexisting conditions. Carefully read the application and policy so you understand what is covered and to the extent each item is covered. Home warranty policies may be purchased by either Buyer or Seller.
MORE READING...
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Upon Further Inspection
•
The Closing Procedure