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Frequently Asked Michigan Mortgage Questions

  1. Questions From First Time Home Buyers
  2. General Mortgage and Loan Financial Questions
  3. Mortgage, Title & Homeowner's Insurance Questions

    Definitions (What do all these terms mean?)


Mortgage, Title & Homeowner's Insurance Questions
  1. What is mortgage insurance and do I need it?
  2. How does mortgage insurance work?
  3. Do I need Michigan mortgage insurance?
  4. Are there discounts available for mortgage insurance premiums?
  5. What is PMI?
  6. What is title insurance and why do I need it?
  7. What is Homeowner's or Hazard insurance?
  8. How much Homeowner's insurance coverage will I need?
  9. When do I need earthquake insurance coverage?
  10. Must I have flood insurance coverage?
  11. What is the best way to shop for insurance in Michigan?

  1. What is mortgage insurance and do I need it? Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It is required primarily for borrowers making a down payment of less than 20%.

  2. How does mortgage insurance work? Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can't repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

  3. Do I need Michigan mortgage insurance? You need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. Ask your Michigan loan specialist for details.

  4. Are there discounts available for mortgage insurance premiums? Ask your real estate agent or lender for information on the HELP program from the FHA. HELP - Home buyer Education Learning Program - is structured to help people like you begin the home buying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

  5. What is PMI? PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI's usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.
TITLE INSURANCE
  1. What is title insurance and why do I need it? Before you purchase a property or close on a new loan, it's essential to know that the title to the property will be free and clear, free of prior defects and indebtedness. A homeowner and prospective lender need to be certain that what is available on the property is what is referred to as a "marketable title". A title company researches the legal history of the property which entails searching public records in the offices of the county recorder. Problems with the title could threaten the mortgage, limit ones use and enjoyment of the property and could result in financial loss. A policy of title insurance protects a homeowner's title and the insurer covers the cost of any legal challenges.
HOMEOWNER'S INSURANCE
  1. What is Homeowner's or Hazard insurance? Homeowner's insurance protects both the owner as well as the lender against the occurrence of physical damage to the property (i.e. fire or burglary). Some perils are not generally covered by the standard homeowner's polices, for example floods and earthquakes.

  2. How much Homeowner's insurance coverage will I need? The preferred policy of lenders is a guaranteed-replacement-cost policy which will generally pay out 20-50% more than the face value of the policy to rebuild your home. A replacement-cost policy typically adjusts the amount of insurance each year to keep pace with rising construction costs in your area. It is important to note that local building codes require structures to be built to specific standards which could vary over time, if your home is severely damaged, you may be required to rebuild it to current codes. Even guaranteed-replacement-cost polices do not always cover this expense. However, many insurers offer an endorsement that will pay for the upgrading cost, it is a good idea to consider adding such an endorsement to your replacement-cost policy.

  3. When do I need earthquake insurance coverage? When your property is located in an earthquake hazard zone.

  4. Must I have flood insurance coverage? The lender should not ask you to obtain a flood policy unless your property is located in a flood hazard zone.

  5. What is the best way to shop for insurance in Michigan? A reliable method of shopping for both homeowner's and earthquake insurance is to get estimates from at least three high-rated companies. Be prepared to discuss the type of policy you want as well as the coverage limits you require You may check insurance company ratings at the following websites: www.ambest.com and www.insure.com . If you find you are in need of flood insurance, you may contact the National Flood Insurance Program at (800)638-6620 for a quote.

  6. More Questions? Please contact your personal mortgage loan specialist, assigned to you here on this site, don't hesitate to ask any questions you may have.   Top
 
Elizabeth Stevenson
Loan Specialist

Hours: 10am-6pm Mon.-Fri. MST
Phone: (877) 511-8811
Fax: (866) 897-2452


Welcome!
My name is Elizabeth Stevenson. I am a licensed and bonded loan officer with Accurate Lending. I have been chosen to be your personal representative for any loan needs or questions that you might have.

Look for my picture throughout the site for helpfult tips and information and feel free to contact me anytime.

I look forward to working with you.

Elizabeth Stevenson
Accurate Lending