Reviewing the numerous types of insurance available during the home buying process can be overwhelming. You already have so much to do to close on your home—do you really have to jump through more hoops? Well, yes. No sensible car owner would drive without insurance, so it stands to reason that no new homeowner should be without insurance, either.
From title insurance to homeowner’s insurance, the essential idea behind various forms of real estate insurance in Texas is to protect owners from unexpected events. If something goes wrong, insurance can be the bargain of a lifetime.
There are various forms of insurance associated with home ownership, including these major types:
Purchased with a one-time fee at closing, title insurance protects owners in the event the title to the property is found to be invalid. Coverage of this type of insurance includes “lenders” policies, which protect buyers up to the mortgage value of the property in Texas, and “owners” coverage, which protects owners up to the purchase price. In other words, owners coverage protects both the mortgage amount and the value of the down payment.
This insurance provides fire, theft, and liability coverage. Homeowners policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture, and home office equipment. Compulsory for homeowners with mortgages, homeowner’s insurance can be separated into five key areas that owners are protected against: damage to the home, personal property, liability, medical payments, and loss of use.
Pays for damage to your home and unattached structures, such as sheds, fences, and garages up to the limit you specify.
Repairs or replaces the contents inside your home, such as furniture, appliances, and clothing, should they be damaged or stolen.
Protects you should someone injure themselves on your property and then file a claim against you.
Covers the medical bills associated with an injury that occurred on your property, such as copayments, MRIs, CAT scans, EKGs, etc.
Loss of use
Pays for living expenses should your home be too damaged to occupy while repairs are being made after you have filed a claim.
Generally required in high-risk, flood-prone areas, this type of insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home, plus $100,000 for contents. Your realtor can explain which locations require such coverage.
Optional coverage that protects your home in the event of an earthquake. Western states like California are more prone to earthquakes, while eastern states have a relatively lower risk. Some insurance companies consider earthquake insurance an add-on to a standard homeowner’s policy while others may make you purchase as standalone insurance.
With new homes in Texas, this assures that if something goes wrong after completion, the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business? Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with your real estate or insurance agent.
Golden State Mortgage Can Help
At Golden State Mortgage, we are a California based mortgage company, and specialize in FHA home loans for first time home buyers. FHA loans are a great option for first time home buyers and if this is your first home purchase then a California FHA home loans are probably your best option due to the low down payment and easier credit standards. Your down payment can be as low as 3.5% of the purchase price, and closing costs and fees can be covered by the seller. Call Golden State Mortgage today at 1-888-502-2136 or fill out the quick contact form to speak with a California FHA loan consultant and get a free good faith estimate.