An insurance policy required by mortgage lenders to ensure that the subject property is adequately insured.
Homeowner's insurance, also called hazard insurance, is required by mortgage lenders to ensure that the subject property is adequately insured.
This insurance policy protects the borrower and lender in the event of damage. The insurance is considered adequate for lending purposes when dwelling coverage supports either a) the loan amount or b) the projected replacement cost for the property based on either the appraiser’s determination or the insurance provider’s internal evaluation. Condominium insurance is usually cheaper, as it typically only requires coverage for the "walls-in" space; the condo’s HOA dues cover insurance for the ‘walls-out’ areas of the community.
Regardless of how the loan is structured, the first annual homeowner's insurance premium must be paid by closing.