Homeowners insurance
What is homeowners insurance?
Homeowners insurance covers damage to your property and liability claims. Lenders require it for the life of the loan, and it is normally collected monthly through escrow.
What it means in practice
Premiums vary widely by location, construction, claims history and coverage limits, and have risen sharply in areas exposed to wildfire, wind and flood.
Flood coverage is almost always a separate policy. A standard homeowners policy does not cover flood damage.
Unlike your interest rate, this cost keeps changing after closing, which is why a refinance decision should never be made on principal and interest alone.