As we saw in a previous post, home insurance is not mandatory in California. But what about mortgages? Is home insurance mandatory if you want to take out a home loan? Keep reading to find out.
Is Home Insurance Mandatory When You Take Out a Home Loan?
The vast majority of lenders will require you to have home insurance as a condition for obtaining a loan from them. However, the specifics may vary from institution to institution, so make sure to check with your lender to get a more detailed answer.
The reason lenders require you to have home insurance is that when an institution such as a bank lends someone money, they are running a risk.
If a borrower fails to repay their loan, then the only way a lender can recoup the loss is by selling the house, but they can’t do it if the property is damaged or has been destroyed. A home insurance policy protects lenders against this potential loss.
What Factors Impact Your Home Insurance Rates?
It doesn’t matter whether you need home insurance because a lender requires you to or because you want to protect your finances. If you are looking to purchase home insurance, then it’s a good idea to be aware of the factors that determine how much you’ll pay for it.
These are some of the main variables insurance companies consider when calculating your premiums:
- The price of your home
- Your home’s square footage
- Your home’s age and condition
- The likelihood of natural disasters
- Local crime rates
- Your credit history
- Your deductible
Have more questions about home insurance? Feel free to contact our experts at Delgado’s Insurance. We’ll be happy to answer all your questions and help you build a policy that meets your needs.
To learn more about home insurance, be sure to check out our previous posts, “10 Essential Home Insurance Terms,” and “Wildfires and Home Insurance: What You Need To Know.”
Delgado’s Insurance: Affordable Home Insurance in California
If you need dependable and affordable insurance in the Golden State, look no further than Delgado’s Insurance.
We have locations in Riverside, California, and Bloomington, California. Get in touch today by telephone (951-361-0084, 909-421-9003), email (mail@delgadosinsurance.com), or through our social media accounts (Facebook, Twitter)!
