Insurance Flashcards
What does homeowner/ hazard insurance do?
Protects lender and borrower
How much prepaid insurance does homebuyer need to close?
1 year pre paid insurance
How much insurance does a borrower need?
Enough to cover structure and attached garage
What does condo insurance cover?
Interior walls and personal property and liability if someone is injured
What is the mortgagee clause?
When lender is added to policy as loss payee
What happens if insurance lapses
Lender places forced insurance on home and must send 2 notices within 45 days with no response
What is PMI
Private mortgage insurance that protects lender in case of default by borrower
When is PMI required?
On conforming loans over 80% LTV
When does my PMI automatically drop off?
At 78% LTV
If the premium was .94 % on a $150,000 loan, what is the monthly cost of PMI?
117.50
**150k x .0094/12 = $117.50
How much does PMI allow a borrower to put down
5% down because the company is taking some of risk if borrower defaults
Some of the factors private mortgage insurance companies consider when they set their rates and coverage parameters include all of the following except:
a. Loan amount and loan type
b. LTV and borrowers credit score
c. Borrower’s age and familial status
d. Type of property
c.
What is title insurance?
Protects from financial loss due to defects on title to real property and from unforceability of liens
What are the 2 types of title insurance
- owners policy
- lender’s policy
What is owner’s policy
free and clear of all defects
