The short answer is yes.
We know – when you buy a house, the fees and costs come at you left and right. It’s a drag to think about one more annual cost.
But if you’re taking out a mortgage to buy your home, the lender will require you to buy homeowner’s insurance; in fact, the lender may even set a minimum level of insurance that you have to buy. Why does the lender care?
Remember that until you pay off your home, the lender technically owns all or part of it. The bank wants to make sure its investment in your home is protected. Your home is the collateral on the loan.
Typically, homeowner’s insurance covers damages to the home from hazards like storms, fires, theft, or vandalism. It also offers personal liability coverage if someone else is injured in your home in an accident. In some areas, you’ll need to also buy flood or earthquake insurance; this coverage is not typically covered by most policies.
Most lenders roll your insurance payment into your monthly mortgage. The payment you make each month pays off when you need the insurance; it can save you thousands or even millions of dollars.
