Fire/Hazard Insurance

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homer_simpson

homer_simpson

Well-known member
Just got a quick question about a property my brother is currently in escrow with.  The lender is requiring him to buy the coverage for the full loan amount of $500,000 eventhough the cost of rebuild is not going to be that high.  The HOA covers zilch, only common areas.  Have you guys heard of this before where the lenders require the insurance coverage to be the full loan amount? Sounds ridicoulous.

Thanks
 
i would buy fire insurance to cover the full loan amount. the additional premium seems like a small price to pay to be able to high tail it free and clear after you house burned down. If my house burned down i dont think i would want to rebuild there.
 
Oh no I think he knows that, I just think he wants to know if its pretty common for the lender's to require a coverage of the full loan amount? 

For mine, the lenders just wanted to cover the full replacement of the condo.
 
Is this a Condo loan, a Single Family Detached Condo - as many in Irvine are - or a plain ol' SFD?

Most lenders want replacement cost only, no matter the property type, and that data's on the appraisal. If this is an attached condo, there is what is called "walls in" coverage - technically H-06 insurance that is required above and beyond the HOA's insurance.

My .02c

Soylent Green Is People.
 
This is for a detached-condo loan in Irvine as well.  I'm just suprisd the lender's require him to cover up the whole loan amount. The best insurance quote he got thus far is like $1300 for the full year.

Eeks.. :o
 
homer_simpson said:
This is for a detached-condo loan in Irvine as well.  I'm just suprisd the lender's require him to cover up the whole loan amount. The best insurance quote he got thus far is like $1300 for the full year.

Eeks.. :o
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I pay $39/month for replacement coverage only.  I started with BofA, not impounded, refi to citi and still pay on my own.  Which lender is your brother using?  Shop around?  When i refi with citi they wanted to do impounds, I told them no, they said ok.  Of course I was  playing multiple lenders off each over.... They gave in to what I wanted, just make sure you have "leverage".  This is for tha detached condo project you msg me about?
 
This is the place I messaged you about bud.  I do not know who his lender is but I believe they are having him pay in full.

Everyone I asked and even I have coverage for the replacement of the home.

Really weird that want to cover the full loan..
 
homer_simpson said:
This is the place I messaged you about bud.  I do not know who his lender is but I believe they are having him pay in full.

Everyone I asked and even I have coverage for the replacement of the home.

Really weird that want to cover the full loan..
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If he got the balls, tell the lender he's going to look elsewhere...  see what they say.  Does he have a backup lender?  Might want to casually mention it to the current lender.  Do this assuming he has perfect credit/full doc.  Don't bluff blindly. 
 
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