Category: 
November 23, 2008
My home is a very large 4000sq.ft. old barn. It is in need of repair/ redoing. Therefore I can’t seem to get traditional home insurance. All i can get is Mass Fair Plan, State run, at over $3000 per year. I owe 166,000. If I was to sell as is, it would probaly be $400-450,000. If the house burned to the ground the land alone is at least worth $200,00maybe closer to $300,000. They say the “replacement cost” is over $700,000. Help. I can’t ( or will not) pay $3000 per year for home insurance which two years ago was 600 bucks. Never had a claim. Thanks
All loans require insurance.
If you want to refuse to pay for it that is your call, but you can not expect anyone else to risk their money because you think you know better. You can only risk your own.
Horaayy..there are 6 comment(s) for me so far ;)
ALL real estate loans require fire insurance.
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You'll HAVE to have insurance, at least fire insurance. Depends on lender. But you may NOT need to have replacement cost insurance. Talk to lender, then to insurance companies. They may be trying to sell you the gold plated policy when all you need is tin. You need insurance to pay off your loan in case of loss, you are generally NOT required to insure your equity in home, your interest.
References :
real estate attorney
Never going to happen. Put your self in the lenders shoes would you allow someone to leave property uninsured? See if you can get an installment plan and keep shopping for cheaper insurance and you might just get lucky and only have to carry state insurance for a month or 2.
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Maybe a home improvement loan. ?
My folks had a friend that turned a barn into a house near Auburn, Ca.
It was great. It had the 2 pitches on the roof.
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All loans require insurance.
If you want to refuse to pay for it that is your call, but you can not expect anyone else to risk their money because you think you know better. You can only risk your own.
References :
As others have noted, any lender will require that you carry homeowner’s insurance to cover the cost of replacing the structure to the tune of the outstanding loan on the house.
You mention a re-fi or home equity loan. You say the current mortgage loan is $166,000. You should be able to get an insurance policy for the loan amount after you re-fi, if you’re only refinancing the $166K. If you do some sort of a cash-out re-fi, then you would need to get an insurance policy for that amount.
I’m not sure about a home equity loan, but the lender may very well want to know that their investment is covered in addition to your existing loan balance of $166K.
This sort of thing became a problem a while back where I live when properties were selling for amounts W-A-Y in excess of what the re-building costs would be. Mainly because the actual value was in the location of the property, not the structure(s) sitting on the land. You can’t actually insure the land against damage.
No matter, the lender will win. You will probably find you either get insurance in the amount to satisfy the lender(s) or, you will not get your loan.
Sorry.
References :
TX REALTOR