kevincw01
Joined: 20 Nov 2010
Posts: 1
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| Posted: Sat Nov 20, 2010 7:59 pm Post subject: Lender requiring HO Ins for loan balance |
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This is my second refinance and the underwriter approved the loan with a condition requiring me to raise my HO insurance coverage to the loan balance.
My loan balance hasn't gone up, it's slightly less than the last refi. I didnt have to do this in my first refi(earlier this year) or when I bought the home (2008).
The loan officer's explanation was that if the house were to burn down, the lender wants to recoup the balance. But my insurance agent says that's a waste of money because you should only insure for what it costs to rebuild the home. He said that the value of the land more than makes up the difference between the cost of rebuilding and the net balance of the loan. He said an insurance company would never pay out the full balance of the loan so I'm just wasting my money if I do it.
My loan officer is telling me there's no negotiating, if you want the loan you have to do it. Is this common? Any suggestions?
-Kevin |
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