With all the paperwork surrounding your home purchase, you've probably seen mentions of homeowners insurance and private mortgage insurance (or PMI) — but what's the difference, and how does each offer financial protection? Get the facts here.
what is private mortgage insurance?
When you take a loan out on your home — whether you're just purchasing it or refinancing — the lender has the right to foreclose on your house to recoup their lien if you don't pay the loan. To protect what is their investment too (at least at this point), most lenders will require you to carry private mortgage insurance under certain circumstances.
PMI is designed to financially protect the lender if you stop making payments on your home loan, simple as that. It's generally required if you have a conventional loan and make a down payment of less than 20 percent of the home's purchase price. It can also be required when you're refinancing with a conventional loan and your equity is less than 20 percent of your house's value.
In most cases, your lender will set up PMI through a private insurer and add the premium to your mortgage payments to make things as seamless as possible for you.
how is homeowners insurance different from PMI?
While private mortgage insurance is designed to safeguard the lender in case you default on your loan, homeowners insurance, on the other hand, is designed to financially protect you in case something happens to your beloved abode or the stuff inside it.
Homeowners insurance is generally required as a part of your loan agreement — regardless of circumstances like the amount of your down payment or the percentage of equity you have.
get affordable homeowners insurance from esurance
Whether your roof is the unfortunate victim of a violent hailstorm or a fire ravages your place, homeowners insurance from Esurance can help pay for the repairs necessary to make your house feel like home again.
And the protection doesn't stop there. A standard Esurance homeowners policy generally offers protection for your personal liability if you get sued by a guest injured on your property, and even additional living expenses if your place becomes temporarily unlivable due to a covered event.
Get a quick, free quote online in just a few minutes or speak with our agents at 1-866-439-5633 to see how much you could save with Esurance homeowners insurance.
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