Insuring Real Estate Home Loan in key West

Several types of insurance contracts pay your home loan if you die or become disabled. This type of insurance establishes an annual premium cost for the life of your loan. Because your loan declines as you pay down the principal (main amount of the real estate loan), the amount of insurance coverage decreases each year, although the cost stays the same. In most cases, a term life insurance policy that can be used to pay off the loan in the event of your death is preferable to a mortgage insurance policy. Term life insurance is less expensive and offers better protection and more flexibility. All insurance products are relatively complicated. You may want to consult a Key West local financial professional or an attorney to check these policies before you buy one.

Because temporary or permanent disability can threaten your ability to pay your home loan, you may also want to consider buying a disability policy or participating in any disability insurance offered by your employer. Disability insurance can add to your peace of mind and that of your lender.

What is a due-on-sale clause?

Most but not all due-on-sale clause which requires that the seller pay his or her loan in its entirety at the time the sale is closed. This means that the buyer cannot assume the seller's mortgage. Federal law has replaced state law in this area and due-on-sale clauses are enforceable.

What is a late-payment charge?

Most Key West Real Estate Home loans include a late-payment charge. The lender charges it to the borrower if the monthly mortgage payment is late. These charges can be very expensive. You'll want to make sure you know when your loan payment is due and allow enough time for it to arrive by the due date if you are mailing your Key West Real Estate Loan Payment.

What is a prepayment penalty?

Although illegal in some states, where permitted, home loans include a prepayment penalty. This is a charge imposed if the borrower pays off the loan ahead of schedule. This penalty is usually one or two percent of the loan. It is not unusual for home loans to include a prepayment penalty for the first few years; however, you should avoid mortgages that require a prepayment penalty beyond the third year.