Required insurance

1. Homeowners Insurance
   Homeowners Insurance covers fire, theft, certain natural disasters and personal liability if someone is injured on your property. It protects the lender against the loss of the property that secures your mortgage. You’ll be required to prove that you have adequate homeowners’ coverage as a condition of obtaining a mortgage.
2. Title Insurance
   Several things happen behind the scenes when you buy a house. Someone will perform a title search to make sure the seller has a legal right to transfer ownership, and to see if there are any liens or restrictions on the property. A lawyer, abstractor or employee of the title company will do the title search.
   
   Title insurance provides protection against financial loss in case there is a problem with the title at some future date. Possible issues include:
   • Flawed information in deeds or mortgages (like an incorrect name)
   • Liens or claims against the property or property owner (unpaid taxes or bills for water service)
   • Claims to ownership from a former owner or spouse
   • Invalid deeds (from a past sale or transfer by a party who didn’t actually own the property)

May be required insurance

3. Private Mortgage Insurance (PMI)
   If you have less than a 20% down payment, we may require you to buy mortgage insurance. This coverage helps protect the lender in case you can’t make your payments and default on the loan. Your lender isn’t the only beneficiary - mortgage insurance makes it possible for people with small down payments to buy the home of their choice.
4. Flood Insurance
   Flooding is not covered by a standard homeowners’ insurance policy. To determine if you need flood insurance, ask your insurance professional about the flood history in your area. If there is a potential for flooding, you will be required to purchase a policy that covers the structure and your personal belongings.
   
   Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance Administration (FIA), part of the Federal Emergency Management Agency (FEMA). Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP).

Learn more about mortgages on our Mortgage Education web page.