With the signing of papers on a new house, any financing is going to require mandatory home owners insurance before the deal is done. Often times, mortgage companies will have agreements in place with insurance companies, but most times this is not in your best interest. The rates are increased to provide a few points to the mortgage company for acting as a broker, and it’s you who ends up footing the bill. For a 30 year mortgage, this could mean an additional $50,000 in costs that you are paying simply because you didn’t do your research. To find the best deals, it’s a good idea to shop for home owners insurance just as you shopped around for your mortgage company.
Start With a Mindful Approach
When dealing with any salesman, it is important to remember that you are looking out for your own best interests, not theirs. Any initial offer is going to have extravagant points added on to make a profit for the company as well as commission for the salesman. When talking with them, use an amortization calculator to quickly see what your rates are going to cost you in the long run. Usually used for calculating how much a mortgage will cost you in the longer run, percentage-based calculators can also help you with determining dollar based payment plans if you know the interest rate ahead of time. Use the principal of the housing loan you are taking out, and make sure this is the amount your insurance is using to cover damages. If it’s within reason, then you are in a good place. If the numbers don’t match up to the salesman’s pitch, something is off and ask for them to break down the details.
Know Your Risks
In relation to your monthly premiums, know what your deductible is. If you have a high deductible and this is something you are comfortable with, ensure that your coverage matches the cost. When the time comes for you to call in a claim against damages to your home, such as fire, flood, or act of god, make sure you are adequately covered. If your monthly premiums are extremely low on the other hand, make sure you understand how much you are covered for in case of an incident. If your insurance doesn’t cover what the overall expenses of repairs of replacement are, you will be required to make up the difference.
Make sure you understand your rights as a consumer, and always work with a reputable, national insurance company with ties to your community. The last thing you want is to be left out of the cold in case of an accident.
Mindful Home Insurance Shopping
