We're taking out a home equity line of credit in anticipation of purchasing a new home before we sell our existing home. We've no experience in doing this and were surprised to learn we have been asked to sign a document telling our home owners insurance the lender is a lien holder on our home. We haven't borrowed any money and may not in fact even need to borrow. Since there is no cost to take out the loan we were advised to have one just in case.
Is this standard practice to add a lien on home owner's insurance?