Private mortgage insurance (PMI) is insurance designed to protect the lender from losses in the event the borrower defaults on the mortgage. Purchased by the buyer from a private insurance company, it is usually required when the down payment is less than 20% of the purchase price or appraised value, whichever is less.
Title insurance protects an owner's or a lender's financial interest in real property against loss due to defects in the property title, liens or other matters. Title insurance helps defend against lawsuits challenging the title as it is insured, and covers monetary losses incurred due to legal judgments.
Homeowners insurance, also commonly called hazard insurance, is a type of property insurance that covers private homes. It combines various personal insurance protections, such as losses occurring to the home itself, as well as liability insurance protections, such as losses due to accidents that may happen at the home. Because homeowners insurance protects the owner and the lender against physical damage to the property, it helps protect the lender's investment.
If your property is located in an earthquake-prone area, your mortgage lender will likely ask you to secure earthquake coverage in addition to your standard homeowners insurance policy.
If your home is located in what the government has determined to be a floodplain or a Special Flood Hazard Area (SFHA), your mortgage lender will likely ask you to secure flood insurance coverage in addition to your standard homeowners insurance policy.