People who maintain homeowners insurance in Houston sometimes wonder whether or not Texas law requires them to carry this type of insurance? While no legal requirement usually exists to purchase insurance coverage to safeguard a residence from damage, as a practical matter most people cannot buy a home in Houston without this useful product.
When a buyer purchases residential property, most sellers today seek financing assistance from a bank or other mortgage lender. The company issuing the loan pays the seller of the home (and the seller’s mortgage holder, if applicable). Then the purchaser makes regular, typically monthly, mortgage payments to the lender during the course of buying the home.
Local lending institutions that issue a mortgage to a homeowner have a strong interest in buyers maintaining homeowners insurance in Houston to safeguard real estate carrying mortgages. If an accident destroys a property the proceeds from the insurance policy will typically compensate both the lender and the owner of the home for the loss.
A Typical Mortgage Requirement
Sometimes home buyers who carry home insurance in Houston fail to realize that the full amount of the insurance won’t automatically compensate them if damage occurs to the property. The lender, the beneficiary of the mortgage, typically receives payment first.
For this reason, as a condition of issuing a mortgage, most local lenders will require a home purchaser in Houston to maintain homeowners insurance in Houston. The existence of insurance coverage means that the lender won’t suffer a huge financial loss if serious property damage occurs and destroys the house.
After Retiring The Mortgage
Could a typical home purchaser with homeowners insurance in Houston decide to stop carrying insurance on a property after completing the purchase and paying off the mortgage? Yes. Would most financial experts recommend that course of action? No. Although individual circumstances vary sometimes, most homeowners who have paid off a mortgage face no legal obligation to continue carrying homeowners insurance in Houston. Yet at a practical matter, most financially astute people would never make that mistake.
Saving money by not obtaining homeowners insurance in Houston to protect a fully owned residential property places a real estate owner at great risk of financial loss and hardship. People usually carry homeowners insurance in Houston in order to obtain compensation for damage to the residence. Money from an insurance settlement may pay for necessary repairs or the construction of a new home. If a property owner decides not to maintain insurance coverage for the residence, and serious damage occurs, the owners might suffer extreme difficulty paying for expensive repairs and rebuilding.
Some financial experts advise people carrying homeowners insurance in Houston to meet with a financial advisor and review their insurance coverage needs periodically. For instance, if a homeowner purchases a property for $100,000 and the real estate doubles in value over the course of a decade, at the end of the ten year period the property would hold a value of $200,000. An original insurance policy protecting the homeowner’s rebuilding costs might prove insufficient in this situation, so the owner might want to consider requesting an inflation guard to make sure that the dwelling limit automatically adjusts up or down to reflect the actual construction cost for rebuilding purposes.
The booming real estate market in some areas of Houston means that households with homeowners insurance in Houston often benefit by reviewing insurance policy coverage needs frequently. If a property owner purchases an appreciating residential property but fails to increase insurance coverage as real estate values and construction costs rise, the homeowners may sustain a significant loss if an accident occurs that damages the residence and the homeowner plans to rebuild the home. Effective homeowners insurance in Houston usually requires giving some consideration to this timely issue.
Helpful Online Resources
Today, many real estate owners use the Internet to obtain valuable tips and guidelines for saving money. Some websites furnish emailed newsletters alerting homeowners about financial issues, for instance. These types of tools may offer assistance to people in the Houston, Texas area.