Docstoc

Houston Mortgage First-Time Homebuyer - FAQ Part 10

Document Sample
Houston Mortgage First-Time Homebuyer - FAQ Part 10 Powered By Docstoc
					                                     Call Today: (800) 704-5432 or (281) 305-9375
           TEXAS
           Financial Services
                                     Click Here to Apply For Your Houston Mortgage

                                                                                             H O U S T O N F H A & U S D A M O RT G A G E C O N V E N T I O N A L M O RT G A G E
                                     W W W. H O U S TO N M O R T G A G E T E X A S . C O M   M O RT G A G E H O U S T O N VA M O RT G A G E 1 S T- T I M E H O M E B U Y E R S




Houston Mortgage First-Time Homebuyer: Frequently Asked Questions (FAQ) Series


Part 10: Understanding Insurance,
Homeowners Insurance and Warranties

When purchasing a home, spending a little money
upfront will go a long way toward keeping you protected
in the future. While some protections, such as mort-
gage insurance, are required and do more to protect the
lender than you, other types of insurance and coverage
will help you keep you and your investment protected.
The following Frequently Asked Questions (FAQs) are
provided by our Houston Mortgage experts to help you
learn more about these protections and why you need to
have them.


What is mortgage insurance?

Mortgage insurance is a type of insurance policy that provides the lender with protection against some or
most of the loss that would result if you stopped making payments on your loan. Borrowers who make a
down payment of less than 20 percent are typically required to purchase a mortgage insurance policy in
order to reduce the amount of risk the lender is taking by approving the loan.

As with other types of insurance, such as auto or home insurance, you must pay a premium toward your
mortgage insurance policy. If you fail to repay the loan as agreed, the lender may foreclose on your property
and then file a claim with the mortgage insurance company in order to reclaim some or most of the losses.


Is it possible to receive a discount on the FHA initial mortgage insurance premium?

Yes. For those who complete the Homebuyer Education Learning Program, or HELP, it is pos-
sible to receive a reduction in the initial FHA mortgage insurance premium. The
HELP program educates homeowners on a wide range of topics, including:                                                                              {1}
                                                                                                                                                      PAGE
                                    Call Today: (800) 704-5432 or (281) 305-9375
           TEXAS
           Financial Services
                                    Click Here to Apply For Your Houston Mortgage

                                                                                            H O U S T O N F H A & U S D A M O RT G A G E C O N V E N T I O N A L M O RT G A G E
                                    W W W. H O U S TO N M O R T G A G E T E X A S . C O M   M O RT G A G E H O U S T O N VA M O RT G A G E 1 S T- T I M E H O M E B U Y E R S




Houston Mortgage First-Time Homebuyer: Frequently Asked Questions (FAQ) Series


•	     Budgeting

•	     Finding	a	home

•	     Getting	a	loan

•	     Home	Maintenance

Those who complete the program may have their initial FHA mortgage insurance premium reduced from
2.25 percent to 1.75 percent of the purchase price of the home.


What is PMI?

PMI, or Private Mortgage Insurance or Insurer, is a privately-owned company that provides mortgage insur-
ance. Most insurers offer standard programs as well as special affordable programs for certain types of
borrowers. Lenders use the guidelines provided by these companies to help them determine whether or not
a borrower is eligible for a mortgage loan. In general, Private Mortgage Insurers require larger down pay-
ments and have stricter qualifying ratios. On the other hand, their premiums are typically lower and they
provide insurance on loans that exceed the FHA limit.


Do I need to purchase homeowner’s insurance?

If you have taken out a mortgage loan, the lender will require you to purchase a homeowner’s insurance
policy. Therefore, proof of insurance is required at closing. Even after paying off your mortgage loan, home-
owner’s insurance will help you protect your investment against hazards, theft and accidents that occur on
your property.




                                                                                                                                                   {2}
                                                                                                                                                     PAGE
                                    Call Today: (800) 704-5432 or (281) 305-9375
           TEXAS
           Financial Services
                                    Click Here to Apply For Your Houston Mortgage

                                                                                            H O U S T O N F H A & U S D A M O RT G A G E C O N V E N T I O N A L M O RT G A G E
                                    W W W. H O U S TO N M O R T G A G E T E X A S . C O M   M O RT G A G E H O U S T O N VA M O RT G A G E 1 S T- T I M E H O M E B U Y E R S




Houston Mortgage First-Time Homebuyer: Frequently Asked Questions (FAQ) Series


What special homeowner’s insurance issues should I consider before purchasing
my home?

Different geographic areas have unique issues that should be considered when looking for a home. Some
general issues to consider include:

•	     Is	the	home	located	on	a	flood	plain?	If	so,	you	will	need	to	purchase	flood	insurance	if	you	plan	to		
       take out a mortgage loan.

•	     Is	the	home	located	in	a	low-lying	area?	Homes	located	in	low-lying	areas	are	more	prone	to	flood		
       ing, but may not be eligible for flood insurance. You will need to weigh the risks to determine if this
       is a deal breaker for you.

•	     Is	the	home	located	in	a	high-risk	area	for	natural	disasters,	such	as	hurricanes,	earthquakes	and		 	
	      tornados?	While	your	homeowner’s	insurance	will	cover	losses	due	to	these	disasters,	your	
       premiums may be higher the home is located in a high-risk area. Also, even if the insurance cost is
       affordable, you need to decide whether or not you want to live in an area that is prone to
       natural destruction.

•	     Is	the	home	located	in	a	hazardous	materials	area?	The	ill	effects	of	hazardous	materials	can	last	for		
       many years and can affect water and air quality.

•	     Does	the	home	meet	all	building	codes	and	apply	to	local	zoning	laws?	If	not,	you	may	be	
       responsible for making the necessary modifications or you may have difficulty with remodeling or
       making additions to the home in the future.


What steps can I take to help lower the cost of my homeowner’s insurance?

The most important step you can take toward minimizing the cost of your homeowner’s
insurance is to purchase the right home. You can keep costs down by choosing a
home that:                                                                                                                                         {3}
                                                                                                                                                     PAGE
                                     Call Today: (800) 704-5432 or (281) 305-9375
           TEXAS
           Financial Services
                                     Click Here to Apply For Your Houston Mortgage

                                                                                             H O U S T O N F H A & U S D A M O RT G A G E C O N V E N T I O N A L M O RT G A G E
                                     W W W. H O U S TO N M O R T G A G E T E X A S . C O M   M O RT G A G E H O U S T O N VA M O RT G A G E 1 S T- T I M E H O M E B U Y E R S




Houston Mortgage First-Time Homebuyer: Frequently Asked Questions (FAQ) Series


•	     Is	not	located	in	an	area	that	is	prone	to	natural	disasters

•	     Is	newer	and	constructed	out	of	sturdy	materials	such	as	brick

•	     Located	near	a	fire	hydrant	or	fire	department

When choosing a homeowner insurance policy, be sure to compare the rates of several insurance companies.
You may also be able to lower your rates by purchasing your homeowner’s insurance policy through the
same company as your car insurance, by obtaining group coverage through a business or alumni association,
or by increasing your home security. Another option is to increase your deductible, but keep in mind that
this will also increase your out-of-pocket costs if you file a claim.


What is a home warranty?

A home warranty protects you against potentially costly problems that are not covered by homeowner’s
insurance, such as unexpected repairs on home systems and appliances. Home warranties only provide cov-
erage for a limited amount of time, but they are becoming increasingly popular with homebuyers because
many find themselves a bit strapped for cash for a period of time following a home purchase.




                      Call today: (800) 704-5432 or (281) 305-9375 or visit us online:
                                  http://www.HoustonMortgageTexas.com




                                                                                                                                                    {4}
                                                                                                                                                      PAGE

				
DOCUMENT INFO
Description: Houston Mortgage First-Time Homebuyer - Frequently Asked Questions (FAQ) - Part 10 - When purchasing a home, spending a little money upfront will go a long way toward keeping you protected in the future. While some protections, such as mortgage insurance, are required and do more to protect the lender than you, other types of insurance and coverage will help you keep you and your investment protected. The following Frequently Asked Questions (FAQs) will help you learn more about these protections and why you need to have them.