MortgageCast

While requirements vary by lender and loan type, most mortgages require, at a minimum:
Dwelling Coverage: Enough to fully rebuild your home at current construction costs.
Liability Coverage: Typically a minimum of $100,000.
Other Structures Coverage: For detached garages or fences, usually 10% of your dwelling coverage.
Personal Property Coverage: For your belongings, often 50-70% of your dwelling coverage.
Loss of Use Coverage: For additional living expenses if you can’t live in your home, usually 20% of dwelling coverage.

It can be. While you may get a lower interest rate, you are shifting unsecured debt (like credit cards) to secured debt tied to your home. You risk your home if you cannot pay. There is also a behavioral risk: if you run up credit card debt again after consolidating, you’ll be in a far worse financial position.

The Federal Reserve (the Fed) does not directly set mortgage rates, but its actions heavily influence them. When the Fed raises its benchmark federal funds rate to combat inflation, it becomes more expensive for banks to borrow money. This cost is often passed on to consumers, leading to higher rates on various loans, including mortgages. Conversely, when the Fed cuts rates to stimulate the economy, mortgage rates often trend downward.

PMI is insurance that protects the lender if you default on your loan. It is typically required on conventional loans when your down payment is less than 20%. The cost is added to your monthly mortgage payment. Once you reach 20% equity in your home, you can usually request to have PMI removed.