Homeowners insurance and your New Hampshire mortgage

What insurance does a mortgage lender require?

A homeowners policy that covers the home itself against hazards such as fire and wind, with the lender named as mortgagee so it's notified about claims and cancellations. Fannie Mae, for example, requires coverage on a replacement cost basis and caps how high the deductible can be.

A week or more before closing, lenders usually ask for the insurance binder or policy and proof that the first year's premium is paid or will be paid at closing.

How is insurance paid through escrow?

Most loans include an escrow accountEscrow account An account your loan servicer uses to collect and pay your property taxes and homeowners insurance as part of your monthly payment. See the full glossary×. Each month part of your payment goes into it, and the servicer pays your insurance premium and town property tax bills when they're due. If your premium goes up at renewal, your monthly payment can change after the yearly escrow review. The tax bills and escrow guide explains how that review works.

When should I shop for homeowners insurance?

Start as soon as you're under contract. Insurers price the home itself, so details like the roof's age, the heating system and the distance to a fire hydrant or station can matter. Some insurers also ask about wood stoves, oil tanks or the age of the electrical system, which come up often in older New Hampshire homes.

Compare the coverage and the deductible, not just the yearly premium. Ask Tom to plug your quote into the payment so you see the real monthly number; the payment calculator includes insurance.

What about condos?

A condo association carries a master policy for the building and common areas. You'll usually need your own policy, often called an HO-6 or walls-in policy, for the inside of your unit and your belongings. Lenders also review the association's coverage; the condo guide covers what they look at.

Do I need flood insurance?

If the home is in a FEMA special flood hazard area and your loan is federally backed or from a federally regulated lender, flood insurance is required. Standard homeowners policies don't cover flood. The flood zone guide explains how to check a property's map and what the coverage involves.

What happens if my coverage lapses?

If your policy is cancelled or not renewed, the servicer can buy insurance for the home and charge you for it. This is called force-placed insurance. It usually costs more and may only protect the lender, so keep your policy current and answer any servicer letters about insurance quickly.