Also if you are refinancing an exisitng mortgage, and the new loan amount is higher than the current mortgage, you may have to increase your coverage. Your lender will work with the title or escrow company to make sure the coverage is adequate for the new loan.

It is wise to get quotes from several different insurance companies before committing to one. You may be able to save money by having your house and your car insured by the same company. You can also ask your mortgage professional to recommend an insurer.

Homeowners insurance, also referred to as hazard insurance, is different than mortgage insurance, also known as PMI or private mortgage insurance. It is very important to know the difference between the two. Homeowners insurance protects you, the homeowner, in case your house catches fire, your home is broken into, a water pipe bursts, etc... Private mortgage insurance is not required on all mortgages, usually only mortgages that do not have a minimum of 20% equity in them, and safeguards the lender in case of a default of your loan by you. PMI protects the lender, not you. There are ways around having to obtain PMI if you do not have the required 20% down payment or equity in your home, so consult your mortgage broker today and discover what your options really are.

If you are purchasing a home, a lender will typically require one full year of hazard insurance paid up-front before the loan is closed. They will ask to see the paid receipt from the insurance company before the final closing.