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Hazard insurance policy?


I believe, most lenders require that buyer obtain a hazard insurance policy prior to buying or refinancing a home.
My question is - Is this mandatory or lender's policy or the law?.......or it's up to lender? I am just curious. Thanks

Almost all banks require you to purchase this type of insurance because they don't want to be left with the burden of an unpaid loan (mortgage) if something destroys your home, and you stop paying mortgage (go in default). This is not a state law, however, there are some states that require INSURANCE companies to sell certain insurance policies with their primary homeowners policy (i.e., some places in FL require hurricane/flood insurance, some places in CA require earthquake insurance, etc.) If you do not purchase such insurance, the bank is most likely to deny your mortgage application.

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