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Step 8:
Get Insurance
No one would drive a car
without insurance, so it figures that no homeowner should be without insurance.
The essential idea behind
various forms of real estate insurance is to protect owners in the event of
catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.
What kind and how much?
There are various forms of insurance associated with home ownership, including
these major types:
Title insurance:
Purchased with a one-time fee at closing, title insurance protects owners
in the event that title to the property is found to be invalid. Coverage includes
"lenders" policies, which protect buyers up to the mortgage value of the property,
and "owners" coverage, which protects owners up to the purchase price. In
other words, "owners" coverage protects both the mortgage amount and the value
of the down payment.
Homeowners' insurance
provides fire, theft and liability coverage. Homeowners' policies are required
by lenders and often cover a surprising number of items, including in some
cases such property as wedding rings, furniture and home office equipment.
Flood insurance:
Generally required in high-risk flood-prone areas, this insurance is issued
by the federal government and provides as much as $250,000 in coverage for
a single-family home plus $100,000 for contents.
Home warranties
With new homes, buyers want assurance that if something goes wrong after completion
the builder will be there to make repairs. But what if the builder refuses
to do the work or goes out of business?
Home warranties bought
from third parties by home builders are generally designed to provide several
forms of protection: workmanship for the first year, mechanical problems such
as plumbing and wiring for the first two years, and structural defects for
up to 10 years.
Home warranties for existing
homes are typically one-year service agreements purchased by sellers. In the
event of a covered defect or breakdown, the warranty firm will step in and
make the repair or cover its cost.
Insurance policies and
warranties have limitations and individual programs have different levels
of coverage, deductibles and costs. Your Arizona Dream Finders agent will
have some general answer and can put you in touch with several insurance,
inspection, and warranty professionals who can answer all your questions.
How do
you get insurance?
The time to obtain insurance and warranty coverage is at closing, so speak
with your insurance broker prior to closing. Be sure to ask about limitations,
costs, deductibles and "endorsements" (additional forms of coverage that may
be available).
Next:
Closing
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