Insurance requirements have become such an integral part of the real estate and loan transaction, that they must be included in any comprehensive discussion of real estate finance. Every purchase transaction will require title insurance, and every mortgage will require homeowners insurance. In some situations, lenders may also require flood insurance and/or mortgage insurance. Even purchasers of condominiums and townhouses will have insurance options to consider.
Real Estate professionals need to have a thorough knowledge of all types of insurances to properly guide their clients though the real estate and loan process. This will include Title and Homeowners Insurance requirements as well as mortgage, flood and potentially even credit life insurance. But what is the purpose of each of these?
Title insurance protects against loss from defects in the title to real property while homeowner’s insurance provides protection against damage to real estate improvements, damage to contents, and liability coverage. The National Flood Insurance Program (NFIP) provides property owners the opportunity to purchase flood insurance protection made available by the Federal Government. Mortgage insurance is strictly for the benefit of the lender and Credit Life Insurance pays off the loan with the death of the borrower.
Having an understanding of the various insurance products available to consumers will help the real estate professional remain the conduit of information for their clients. You can learn more about Insurance as it relates to your transactions and clients by registering today for online MRE course: Insurance in Real Estate.
Written and Published by: VanEd