Securing a mortgage for a PUD home is a multi-step process, and today we’re going to discuss one of the critical tasks that you’ll encounter on your quest: hazard insurance.
Here’s a little-known fact about hazard insurance and PUD homes that might change your mortgage game a little bit: Hazard insurance is not always required for PUD homes.
PUD Homes: A Refresher
PUD stands for “Planned Unit Development.” PUDs usually have a mix of housing types. You might see townhomes, condos and single-family residences in the same community.
PUDs are managed by homeowners associations (HOAs). PUD dwellers must adhere to the HOA’s regulations and pay the monthly fee required to maintain the HOA.
What Is Hazard Insurance?
Hazard insurance is the part of your homeowners insurance policy that covers damage from natural disasters or other, well, hazards. Examples include fires, nasty storms, hail or other natural disasters.
PUDs and Hazard Insurance: What You Need To Know
Hazard insurance sounds pretty important, so why wouldn’t it be required for certain PUD mortgages? It’s rare, but if the PUD’s HOA has sufficient insurance coverage for each unit in the community, you might not need hazard insurance. Here are the details:
- The PUD’s umbrella policy must cover 100% of each unit’s replacement cost.
- The PUD’s umbrella policy must cover all common areas in the community.
- If the PUD requires owners to have hazard insurance, the community does not need an umbrella policy for common areas.
Contact MortgageDepot Today!
We don’t expect our clients to know all of the nuances in mortgage land. That’s why we’re here! If you have questions about homeowners insurance requirements, contact us today. We’ll tell you exactly what you need to keep your mortgage process on a smooth path to success!
Connect with one of our loan consultants to learn more.