Frequently Asked Missouri Mortgage Questions
From First Time Home Buyers
Mortgage and Loan Financial Questions
Title & Homeowner's Insurance Questions
(What do all these terms mean?)
& Homeowner's Insurance Questions
- What is mortgage insurance
and do I need it?
- How does mortgage insurance
- Do I need Missouri mortgage
- Are there discounts available
for mortgage insurance premiums?
- What is PMI?
- What is title insurance and
why do I need it?
- What is Homeowner's or Hazard
- How much Homeowner's insurance
coverage will I need?
- When do I need earthquake
- Must I have flood insurance
- What is the best way to shop
for insurance in Missouri?
- 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%.
- 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.
- Do I need Missouri 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
Missouri loan specialist for details.
- 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
- 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
- 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.
- 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.
- 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.
- When do I need earthquake insurance
coverage? When your property is located
in an earthquake hazard zone.
- 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.
- What is the best way to shop for insurance
in Missouri? 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.
- 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
Hours: 10am-6pm Mon.-Fri. MST
Phone: (877) 511-8811
Fax: (866) 897-2452
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.