Closing, title & notaryAll terms starting with H
Homeowners insurance
Also called: hazard insurance, ho-3, ho-6
Property and liability coverage a lender requires, typically paid a year in advance at closing then escrowed.
Lenders require coverage protecting the structure at least to the replacement cost of the improvements. A standard homeowners policy covers a detached house; a condo unit uses a different form that coordinates with the association’s master policy.
The first year is generally paid at closing as a prepaid item, with subsequent premiums collected monthly through escrow.
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Related terms
- PrepaidsMoney collected at closing to fund your own future taxes and insurance, plus interest from closing to month end.
- Escrow account (impounds)An account your servicer uses to collect and pay your property taxes and homeowners insurance alongside the mortgage payment.
- PITIPrincipal, Interest, Taxes and Insurance, the four parts of a typical monthly mortgage payment.
- HOA (Homeowners Association)An association governing a community, collecting dues and enforcing rules that can include rental restrictions.
- Renters insuranceA tenant’s policy covering personal belongings and liability, which a landlord’s policy does not cover.
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