Equity is the amount your property is currently worth minus the amount of any existing mortgage or loan on your property. Escrow An escrow account is set up by your mortgage lender to pay certain property-related expenses, like property taxes and homeowner’s insurance. A portion of your monthly payment goes into the account. If your mortgage doesn’t have an escrow account, you pay the property-related expenses directly. Fixed-rate mortgage A fixed-rate mortgage is a type of home loan for which the interest rate is set when you take out the loan and it will not change during the term of the loan. Flood Insurance Flood insurance is often required by mortgage lenders when properties are located in federally designated high-risk flood zones or floodplains. Flood insurance is a separate policy from homeowners (hazard) insurance, which doesn't typically cover damage or destruction by floods. According to FEMA, the following items are considered part of the building's structure and are covered: • The insured building and its foundation • The electrical and plumbing systems • Central air conditioning equipment, furnaces, and water heaters • Refrigerators, cooking stoves, and built-in appliances such as dishwashers • Permanently installed carpeting over an unfinished floor • Permanently installed paneling, wallboard, bookcases, and cabinets • Window blinds
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