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A common insurance policy that homeowners take in Little Falls, MN, is a homeowner’s insurance policy that protects their personal possessions. If you decide to buy a property through a bonded loan or a mortgage, a financial institution may require you to have homeowner’s insurance before it even considers your application.
Hanneken Insurance Agency Inc. seeks to lighten the burden of homeowners who use loans to buy their dream houses. Mortgage providers face several risks when they lend money to home buyers. One of them is that a borrower may fail to pay the home loan back, leading to foreclosure to recover the loan. It raises the need for banks and borrowers to protect themselves from financial loss.
Another significant risk is that a property can be damaged or destroyed while bonded. In this case, the buyer, you, and your bank are affected. Although the bonded property is damaged extensively, you still have to repay the mortgage. It places a heavy burden on you and hurts your budget, something that you need to avoid.
If you become unable to clear the home loan, your bank may lose in that the property is no longer there to serve as security against the mortgage. For this reason, a homeowner’s insurance policy is essential to protect you and your mortgage provider. The policy provides coverage for the bonded property, not its contents.
If a fire or anything destructive causes severe damage to the bonded property, the homeowner’s insurance should pay for the property loss and repay the home loan, too.
KEY TAKEAWAY
A bonded property faces many risks, including fire, storms, non-repayment, etc., leading to a financial loss to you and your bank or financial provider. A home insurance policy is necessary to protect yourself and the financial institution.
Interested in knowing more about how you can protect yourself when you take a home loan? Contact Hanneken Insurance Agency Inc. today.