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Getting a Mortgage Means Shopping for Homeowners Insurance

If you’re in the process of getting a home loan, you may have begun shopping around for homeowners insurance. When comparing policies keep the following tips in mind to help keep your cost down.

Mortgage Related Expenses

Don’t wait until the last minute to get a homeowners policy. Your monthly mortgage costs are going to include not only principle and interest payments, but also insurance and property taxes.

Use a Mortgage Payment Calculator

Mortgage lenders set aside insurance and tax payments in an escrow account until it’s time to pay your insurer and local government. Use a mortgage payment calculator that lets you include the costs of insurance and taxes so you can figure out exactly how much you are going to pay each month.

Pay a Higher Deductible

The higher your deductible the lower your monthly premium. Deductibles usually start at $250, but by increasing the amount to $500 you could save up to 12% on your premiums, according to MSN. Raise it to $1,000 and you could save up to 24%.

Look for Other Discounts

Another way to reduce the amount you pay for insurance is to buy homeowners and auto policies from the same company. Ask your insurer about discounts for being a long-time customer, having an alarm system, or installing smoke detectors.

Replacement Cost

Get insured for the replacement cost on your home. That’s the amount it would actually cost to rebuild the home in your area. Actual cash value coverage only covers the cost to replace your home minus depreciation. 

Mortgage Refincing and Insurance

If you are doing a mortgage refinance, don’t automatically assume that it makes sense to keep your current homeowners insurance policy. Review the policy and get quotes from other insurers. Ask your insurance company if you qualify for discounts and let them know that you plan to take your business elsewhere if it can’t give you a more competitive price.

Switching Policies

Do not cancel your existing insurance policy until you actually have a new one in place. Be prepared to come to the closing with proof that you’ve prepaid up to a year’s worth of premiums for your insurance policy.  

Even if you aren’t getting a new home loan or doing a mortgage refinance it can pay to review an existing homeowners policy. You don’t have to wait until it’s time for the policy to be renewed to look for ways to lower the cost.

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One Response to “Getting a Mortgage Means Shopping for Homeowners Insurance”

  1. L.A. Insurance and Home Owner Coverage | L.A. Insurance Now Information Online Says:

    […] Getting a Mortgage Means Shopping for Homeowners Insurance | LoanBlog […]

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