Mortgage Insurance or Hazard Insurance

Mortgage insurance

 Mortgage Insurance is required by lenders when you make less than 20 percent down payment. Private or Government mortgage insurance is obligatory in that case and serves to protect lenders from borrowers’ default on payments. The mortgage insurance may be a monthly premium, may be a lump sum paid upfront or a combination of the two. Sometimes the lender will buy the mortgage insurance and pay the premiums instead of the borrower which may result in a higher interest rate.

Hazard insurance

Hazard Insurance or homeowners insurance protects you and the lender from loss or damage to the property. It should cover at least the loan amount. Usually, the comprehensive hazard insurance policy will include general coverage for personal liability, personal property, some medical payments, perhaps even some expenses. Separate insurance policies may be required for natural disasters such as flood.

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