Homeowner’s Insurance

Every lender is going to require you to obtain home insurance to protect your investment and their interest. Your real estate professional should be able to provide you with a list of insurance agencies to start your search. The cost of home insurance can vary across insurance agencies so I highly encourage you to shop for the best cost and terms. Bundling your home insurance with your auto insurance can prove to lower your premium, so I always suggest buyers start from there in obtaining a policy quote.

When your mortgage professional issues a pre-approval for your loan, guidelines relative to home insurance costs are provided as it is included as a part of your final monthly payment amount. This figure will allow you to gauge what is doable in your search for quotes. For example, if your loan approval amount requires your insurance not to exceed $600 per year, then that figure would be your guideline in shopping for a rate. Quotes over that amount would need to be eliminated or you could inquire with the insurance company as to how you could lower the rate. Quotes under the figure are great. Just make sure you are clear about the extent of your coverage, your deductible, etc.

When obtaining a quote, the insurance company will need to know some specific information about the property you are purchasing so be prepared to provide that information.

Typically, an entire year’s insurance is required to be paid in full in order for the insurance company to issue what is called an insurance binder. The insurance binder is what is required by the lender as a part of obtaining your loan. Subsequent insurance payments will typically be included in your monthly mortgage payment. The payment is held in escrow and paid by the lender to your insurance company directly. You’ll want to begin exploring your options shortly after you’ve signed the P & S agreement so that you can take your time getting the information, making comparisons and then deciding on the best option for you.