Hazard Insurance - It is important to the lender that you have insurance that protects against fire. This is called hazard insurance.

The payment to the insurance company for this insurance can be included in your mortgage payment every month.

The cost of hazard insurance will vary from company to company. If you already have one or more insurance policies with a company you should have them price your policy. It may be cheaper due to a "multi line" discount. If you have had a renter's policy in place, you may have earned some credits that can be transfered to your first years hazard insurance premium.

Many people interchange the term homeowners insurance with hazard insurace, and both terms typically refer to the same thing.

If you're not sure where to begin looking for insurance, ask your mortgage professional. They see what their clients are paying and may be able to recommend someone who is reasonably priced and easy to work with.

Home Owner's insurance is typically cheaper in suburban areas than in rural areas due to the proximity of fire hydrants and fire departments.

Usually, borrowers will be required to purchase one full year of homeowner's insurance up-front for purchase loans. The paid receipt will need to be faxed to the lender before the loan funds.

Homeowners insurance may be paid by the borrower on their own terms or it may be included in the mortgage payment, however the they prefer.

Do I Have To Buy Hazard Insurance? - If you have a mortgage on you home, you will have to buy hazard insurance, also known as homeowner insurance. Hazard insurance protects against losses due to most perils. As a financier of your home, banks require you to have insurance coverage in place to protect their investment. In addition, as a condition to granting the mortgage, banks require that you name them as a "mortgagee" on the insurance policy, which entitles the bank to be the payee in case of a loss.

Also if you are refinancing an exisitng mortgage, and the new loan amount is higher than the current mortgage, you may have to increase your coverage. Your lender will work with the title or escrow company to make sure the coverage is adequate for the new loan.

It is wise to get quotes from several different insurance companies before committing to one. You may be able to save money by having your house and your car insured by the same company. You can also ask your mortgage professional to recommend an insurer.

Homeowners insurance, also referred to as hazard insurance, is different than mortgage insurance, also known as PMI or private mortgage insurance. It is very important to know the difference between the two. Homeowners insurance protects you, the homeowner, in case your house catches fire, your home is broken into, a water pipe bursts, etc... Private mortgage insurance is not required on all mortgages, usually only mortgages that do not have a minimum of 20% equity in them, and safeguards the lender in case of a default of your loan by you. PMI protects the lender, not you. There are ways around having to obtain PMI if you do not have the required 20% down payment or equity in your home, so consult your mortgage broker today and discover what your options really are.

If you are purchasing a home, a lender will typically require one full year of hazard insurance paid up-front before the loan is closed. They will ask to see the paid receipt from the insurance company before the final closing.

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