Navigating Homepoint Financial’s Insurance Requirements for Mortgages

Purchasing a home is an exciting milestone. But it also involves significant financial risk for lenders providing mortgage loans. To mitigate those risks, most lenders require borrowers to obtain certain insurance coverages when financing a property.

Homepoint Financial has insurance requirements designed to protect the interests of both the borrower and lender. This article will explain Homepoint’s common insurance provisions so you know what to anticipate.

We’ll cover details on:

• Homeowner’s Insurance Minimums
• Flood Insurance Requirements
• Title Insurance
• Mortgage Insurance Basics
• How to Provide Proof of Insurance
• the Escrow Process
• Insurance Cancellation Concerns
• FAQs

Gaining familiarity with Homepoint’s insurance expectations makes the financing process smoother. Work closely with your loan officer so you don’t overlook any critical insurance provisions.

Minimum Homeowner’s Insurance Requirements

Homepoint requires all borrowers to continuously maintain homeowner’s insurance on their property. This protects your home from damage events like fire, storms, falling objects, theft, electrical issues, etc.

At a minimum, your homeowner’s policy must provide:

• Dwelling Coverage: Equal to replacement cost of improvements
• Personal Property Coverage: Minimum 20% of dwelling coverage
• Personal Liability: Minimum $100,000
• Deductible: Maximum of 5% of dwelling coverage

You’ll need to provide your lender with the declarations page detailing your coverages and limits. Homepoint also requires your home be covered for any specific perils common in your region, like hurricanes or earthquakes.

Mortgage clauses are critical. Your lender will require:

• Mortgagee Clause naming lender as additional insured
• Minimum 30 days notice before canceling

Not properly structuring your homeowner’s policy to meet lender requirements can delay closing or constitute default later on.

When Flood Insurance is Necessary

If the home you’re financing lies within a FEMA designated high-risk flood zone, Homepoint requires flood insurance through the National Flood Insurance Program (NFIP).

Required coverage amounts are typically:

• Building Coverage: Equal to replacement cost or loan balance, whichever is less
• Contents Coverage: Up to $100,000

Flood insurance must remain in place for the life of the loan. Homepoint will escrow premiums. Make sure your policy meets NFIP requirements and includes a mortgagee clause.

Why Title Insurance Matters

Mortgage lenders require title insurance to defend against losses from any undiscovered title defects. Common issues include mistakes or omissions in deeds, forgeries, liens, unpaid taxes/assessments, easement disputes, boundary conflicts, missing heirs etc.

Homepoint requires both a lender’s policy and owner’s policy. The lender’s policy is usually provided by the title company. Borrowers pay for the owner’s policy when they close.

Typical title policy amounts equal the mortgage loan value. Owner’s policies come with additional coverages, like compensation for forced relocations due to title problems.

Purchasing title insurance provides valuable protection for what will likely be your largest investment. It covers legal expenses to resolving any covered title issues.

Mortgage Insurance for Loans with Less Than 20% Down

Homepoint requires private mortgage insurance (PMI) for conventional loans with less than 20% down. Mortgage insurance protects the lender if you default. It typically adds 0.5% – 1% to your interest rate.

On FHA loans with under 10% down, you’ll pay an upfront mortgage insurance premium (MIP) at closing of 1.75% of the loan amount. Plus ongoing annual MIP of 0.45% – 1.05% depending on various factors.

Mortgage insurance costs are usually escrowed. You can request cancellation once you reach 20% equity by paying for a new appraisal.

Carefully weigh the pros and cons of lower down payments requiring mortgage insurance vs. higher down payments that don’t. Run the numbers to see what makes more financial sense long-term.

Providing Proof of Insurance to Your Lender

Once you close on your mortgage, you’ll need to promptly provide Homepoint with proof of insurance before policies expire. This requires submitting:

• A copy of your policy declarations page
• Insurance certificate listing lender as mortgagee
• Flood insurance application and binder if required

You can provide documents:

• By uploading them through your Homepoint account

• Emailing them to [email protected]

• Faxing to 517-318-2201

• Mailing to:

  Homepoint Financial

  11511 Luna Rd, Suite 300

  Farmers Branch, TX 75234

Notify your lender any time your policy renews or coverage details change so their records stay current.

If you fail to maintain necessary insurance, the lender will obtain force-placed coverage at your expense. Avoid force-placed policies by keeping Homepoint updated.

How Insurance Premiums Are Escrowed

Your lender will embed the costs for property taxes and required insurances within your monthly mortgage payment. This is known as escrowing.

Each month a portion of your payment goes into an escrow account held by the lender. When tax and insurance bills come due annually, funds are withdrawn from the account to pay them.

Homepoint will estimate your upcoming bills to calculate your monthly escrow amount. It may adjust periodically based on actual bills to prevent shortages or overages.

Escrowing makes managing insurance/tax bills easy since your lender handles the payments. But your mortgage payment will be higher than if taxes/insurance are paid separately.

Insurance Cancellation and Lapse Concerns

Contact Homepoint immediately if your homeowner’s, flood or mortgage insurance policies are cancelled or expire. Lack of adequate insurance constitutes default.

The lender will force-place expensive temporary coverage you must reimburse. Promptly providing proof of replacement policies will prevent this.

If you change insurance providers, the new policy should take effect when the old one expires. Even a single day gap can prompt force-placed insurance. Coordinate carefully to avoid gaps.

Also notify Homepoint before making coverage changes like lowering dwelling limits or raising deductibles. Your loan terms require maintaining minimum amounts.

Frequently Asked Questions

Can I choose any insurance company?

Yes, as long as they meet Homepoint’s coverage requirements and financial strength ratings. Certain state-run insurers don’t qualify.

What if I can’t afford increased premiums?

Contact your lender before making changes. Lowering dwelling or liability limits requires their approval. Homepoint may allow raising your deductible.

What if I use part of my home for a business?

A standard homeowner’s policy won’t cover business activities. Make sure you obtain appropriate endorsements for any business usage or commercial exposures.

What if I do renovations on the property?

You’ll need to adjust dwelling coverage limits to equal the new replacement cost and inform your insurer. Likely the lender’s title policy will cover additions.

What if I convert to a rental property?

Inform Homepoint if you plan to rent your property, as this affects insurance requirements. You’ll likely need to switch to a landlord policy vs. homeowner’s policy.

What if my mortgage servicer changes?

If Homepoint transfers servicing rights on your loan to another company, contact your new servicer to verify their specific insurance requirements. Don’t let any policies lapse before confirming new provider details.

What if I pay off my mortgage early?

Congratulations on becoming mortgage-free sooner than expected! You can cancel lender-required insurance policies once Homepoint confirms your loan is paid in full. Retain owner’s insurance for your protection.

Partnering with Homepoint Financial

Navigating insurance stipulations for a mortgage can be complex. Homepoint aims to make the process as seamless as possible by clearly outlining their insurance expectations upfront.

They want to ensure properties are adequately protected for both the borrowers and lender’s benefit. Stay in touch with your loan officer throughout the financing process to guarantee you meet all Homepoint’s insurance requirements in a timely manner.