What types of insurance do I need when taking out a home loan?

When obtaining a home loan, there are several types of insurance that are generally recommended to protect both the homeowner and the lender. The first and most essential type of insurance is homeowners insurance, which provides coverage for damages to the home and personal property due to events such as fire, theft, or natural disasters. This insurance also includes liability protection in case someone is injured on the property. Lenders typically require proof of homeowners insurance before closing on a loan. Another important coverage is private mortgage insurance, commonly known as PMI. This insurance is often required for borrowers who make a down payment of less than twenty percent of the home’s purchase price. PMI protects the lender in the event that the borrower defaults on the loan. In some cases, homeowners may also consider additional policies such as flood insurance or earthquake insurance, depending on the specific risks associated with their location. While each situation is unique, it is wise to discuss individual insurance needs with a knowledgeable insurance agent as well as with one's mortgage lender to ensure all necessary protections are in place. For more detailed information specific to First Horizon, visiting their official website may be beneficial.