Question

Nancy is purchasing a home. The purchase price is $195,000.00

and she is obtaining a loan for $130,000.00.
1. What is the coverage amount for the owner's policy?
2. What about the lender's policy?

Answer 1

The coverage amount for the owner's policy is equal to the purchase price of the home, which is $195,000.00 for Nancy's case. The lender's policy coverage amount is equal to the loan amount, which is $130,000.00.

Step-by-step explanation:

The coverage amount for the owner's policy traditionally is the purchase price of the home. In this case, Nancy is buying a house for $195,000.00, so the coverage amount for the owner's policy would be $195,000.00.

As for the lender's policy, it generally covers the amount of the loan. Nancy is obtaining a loan for $130,000.00, therefore the coverage amount for the lender's policy would be $130,000.00.