What Are The Key Differences Between Mortgage Insurance And Homeowners Insurance?

​The purchase of a new home is a complicated and stressful process; the one thing you absolutely must avoid is worrying about the many different kinds of insurance and insurance coverage available to homeowners. But there are big differences between mortgage and homeowner's insurance that should be kept in mind.
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Both homeowners insurance and mortgage insurance are types of insurance. Mortgage insurance exposes you to both of these types, which can increase the cost of home ownership. Their similarities, though, cease there.

The Difference Between Mortgage and Homeowners Insurance
The primary distinction between mortgage and homeowner's insurance is who is protected. Homeowners' insurance may primarily cover the borrower, while mortgage insurance may cover the lender's investment in your home.

1. Mortgage Insurance
   Mortgage insurance may be required for down payments under 20% of the home's buying price. This insurance could protect your mortgage lender against the home loan's financial loss if you cannot make your mortgage payments and default on your loan. The homeowner may pay PMI, but it could only protect the lender if monthly mortgage payments are not made.
   
   
2. Homeowners Insurance
   If anything were to happen to your house or property, possessions, homeowner's insurance might help compensate you financially for the loss. A homeowners' policy may include destruction caused by fires, tornadoes, explosions, and riots. Standard homeowners' insurance plans cover fences, sheds, bushes, and trees.
   
   
3. Homeowners Insurance vs. Mortgage Insurance: How Will You Pay?
   Homeowners' insurance premiums are typically included in the monthly mortgage payment. Roper Insurance Services may include the premium amount in your monthly mortgage payment. An escrow account is used to hold payments until they may be released to the insurance provider.
   
   Depending on your loan type, mortgage insurance premiums are paid in one of two ways. Roper Insurance Services may offer you the option of making a single, lump-sum payment for PMI or adding it to your monthly mortgage payment.

Conclusion
As you go through the mortgage process, you will come across both homeowners insurance and mortgage insurance, but they are two different types of insurance. Having both mortgage and homeowner's insurance is essential to securing one's financial investment in a home.

At Roper Insurance Services, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (828) 697-6709. Get your free quote today by CLICKING HERE. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover. We are more than happy to help!