You may wonder, what is a Mortgagee Clause. You will not close a mortgage loan with an insurance policy containing one.
Before you close your on your home, the Lender will want an insurance policy with the them listen as the lien holder or Mortgagee. The organization of words with the Lienholder info, or Clause with the Mortgagee, is referred to as the Mortgagee Clause. I am just trying to break it down simplistically for people. It will have all the required information that your Insurance Agent will need to bind (close) the policy as required by the Lender. It will include the name of the Lender, address (usually a PO Box), and the loan number.
These are important to the Lender in the case of a loss. This is what makes sure that they get paid or the necessary repairs are done. The repairs being done are important to the Lender only to the extent that they are able to recoup their loan amount in case the home needs to be sold.
Home Equity Lines usually do not need to be on the mortgage.
They are easy to change. Some people believe that they are locked down and cannot change once per year. That is not true. Faxing or emailing the Lender the new policy with them included on the Mortgagee Clause will usually take minutes. Some insurance agents may not be comfortable doing this – but we can definitely help! Or, they may want you to stay with the company that pays the most.
Most people will not need to know too much about the Mortgagee Clause. It is almost entirely handled by the Insurance Agent and Mortgage Processor. But just in case you are like me and like to learn useless information, I wrote this article.