Buying a home is a major investment. It’s not something that you want to leave vulnerable or unprotected. As much as people like to plan for the future, there’s no way to anticipate every possible event that could take place. Insurance exists to support you in the event of unplanned or unexpected trials. Here are a few types of coverage that you need to invest in after you finish shopping for homes for sale in Forest Hills, Tennessee.
Homeowners insurance
Homeowners insurance is often called hazard insurance or abbreviated as HOI. Homeowners insurance is sometimes required by lenders before they will supply the funding you need to purchase your home. Even if you don’t have to have homeowners insurance, it’s still highly recommended that you purchase a policy. You’ll be covered against possible losses on your home that could result from natural disasters, theft, and other unexpected events. You’ll also get help with additional living expenses should you need to vacate your home temporarily after any of these events.
Your Forest Hills, TN realtor may have recommendations about a local provider or agency for you to purchase a policy from. The cost varies based on the size of the property and what kind of coverage you’re purchasing. You could purchase a basic package or you can add on various elements (e.g. flood or earthquake insurance) to ensure that you are fully protected. Keep in mind that some companies will not issue you a policy unless they can first see an inspection report detailing the current condition of the home.
Private mortgage insurance (PMI)
Private mortgage insurance, or PMI, is typically required if the lender is paying more than 80 percent of the total cost of your home. Many home buyers, especially if they are purchasing a home for the first time, use a loan such as a FHA loan that allows them to purchase a home with a lower down payment. PMI protects the lender in these types of situations in the event that you aren’t able to make your payments while the outstanding balance is large. You can sometimes request cancellation after you make enough payments to get your equity in the home up to 20 percent. This amount is determined based on the original appraised value of the home when you first made your purchase. Don’t expect your request to be approved unless you have a good payment history with little to no late payments.
Title insurance
When you purchase a home, you’ll work with a title company to confirm that the seller is the only person with a legal claim of ownership on the home. They will do a thorough background check on the home’s history to determine if there are any liens, or claims of ownership, on both the home and the land. Although they do the best they can to check for anything that may present an issue down the road, it’s still a good idea to have title insurance in case anything comes up after closing.
Title insurance is usually required anytime you purchase a home with outside funding. If you’re paying cash for a home, you aren’t required to have title insurance. However, you may want to purchase your own policy to protect you from issues described above that could potentially come up during the time that you own the home. If you’re still unsure about whether or not you should purchase title insurance, consider speaking with an attorney who can provide you with additional counsel.
Flood insurance
Some lenders require flood insurance for properties that are located in areas where flooding is a high or frequent risk. Most typical home insurance policies do not fully cover damage that can happen as the result of a flood. If flood insurance isn’t required but you want to make sure you’re fully protected from any damage that could happen to your home (or to your personal belongings) in the event that a flood takes place, this will be something you’ll definitely want to consider.
Legal insurance
Buying a home is a complicated process. There’s potential for a variety of different types of legal issues to come up along the way. This isn’t meant to scare you — this is simply the reality. You never know if you’ll have to deal with something unexpected such as a property line dispute or a battle with a service provider over what they can or cannot provide for you and for your home. Legal insurance will ensure that you are fully represented during any of these different types of disputes.
Although you may feel overwhelmed right now by all of this information, you will thank yourself down the road for taking the time to make sure you fully protected your investment. As you continue to think about shopping for a new home, David Hatef is the area's #1 expert. David is a trusted and experienced Forest Hills TN realtor. He takes great pride in walking with his clients through each step of the buying or selling process. He works hard to represent his clients with professionalism and respect from the initial contact all the way up until closing. Reach out to David when you’re ready to take the next step towards buying or selling a home in Forest Hills.
