Did you know that mortgage lenders often require homeowners to take out home insurance policies? Ultimately, the right insurance plans protect not just homeowners but also lenders. If you’re looking for a home insurance agency that serves St. Charles, IL, contact Javelin Insurance Agency.
Considering the Mortgage Lender’s Point of View
Buying a home is often one of the most significant decisions you’ll make in life. The simple fact is that houses are generally quite expensive, and for many families, they are one of the most important investments in their portfolio. Buying the right house today could pay off both in the near and far future.
If you take out a mortgage, you’re not only investing in the house. The lender also invests in the home, given that they are providing the money to purchase it. You’ll typically pay interest on the loan, which is how the lender makes money.
However, if you fall behind on mortgage payments, the lender could eventually take control of the home bought with their money. Then, they can sell the property to recoup the money lent to the homeowner. Mortgages are asset-backed loans, and the property acts as collateral. The more valuable the property, the greater its security for the lender.
If a home is destroyed by a fire or in a storm, the property will typically be worth considerably less. For the lender, this means the value of the collateral is less, and thus risks increase. For this reason, a mortgage provider will often require that home insurance policies cover homes purchased with their funds. These policies protect not only homeowners but also lenders. If you want to work with a home insurance agency that serves St. Charles, IL, get in touch with Javelin Insurance Agency.
