You may know that when you buy a home, you should purchase homeowner’s insurance. You may have never wondered if the coverage is required. Usually, insurance will be taken out of escrow and a part of our monthly mortgage payment. You may pay a yearly premium separate from your mortgage payment. Home insurance is a nuisance so if you could find a way around it should you forego it?
You can legally buy a home without a home insurance policy, but if the house is financed with a lender, the mortgage company usually requires that you have insurance on the property. A lender can also request that your home carry additional policies such as earthquake or flood insurance. There are minimums you must meet based on the value of your home and the lender you do business with. These standards exist so that you as the homeowner will have enough coverage to replace the property should it be a total loss in some type of natural disaster or fire.
The amount of coverage you need depends on how big the mortgage is that you have taken out. There are certain supplemental coverages that may not be required yet are sensible to carry. These extra coverages include:
Personal liability coverage
Personal property coverage
The good news is that as a homeowner you have a choice. You can shop around and see which insurance companies will give you the best coverage for the lowest price.
The bottom line is that you shouldn’t risk going without home insurance. Even if your loan company allows you to cancel your home insurance after a certain point, the risk is really not worth saving money. Without coverage or permission to cancel coverage, there is a chance your mortgage company could put your loan into default.
High deductible, basic insurance policies are better than nothing. If you’re going to pay a premium for home insurance, you should look into getting the coverage that makes the most sense for you and your family. You don’t need over the top coverage amounts, but you should aim for comprehensive protection for your property. The key is to balance the cost of your insurance with the value of the property. If your house burned down, you’d want to know that you could replace your property without worry. If you didn’t have insurance, you could really face some issues. You may not want to pay for home insurance, but you genuinely need it. Make sure you understand your coverages.
About the Author
Ryan Christensen
Responsive, Responsible and Resourceful - How Real Estate Should Be. This is the foundation of our continued success: responsive service, providing accurate and timely information, and demystifying the process. 100% of my business is referral based because I listen to my clients' needs and exceed their expectations. As a full-time real estate broker, I am the best advocate for both my buyers and sellers. I am always available, regardless of the time of day.
Being a native Southern Californian is a tremendous advantage. I know the area. Time is more valuable than money, but neither can be wasted. And, I'm a fan of hard work. My clients can enjoy their home buying and/or selling experience because I provide a trusting, focused, straightforward approach. I look forward to helping you achieve your goals and find joy in homeownership.
I am both a licensed Real Estate and Mortgage Broker. Others choose to concentrate on one or the other. I provide a higher level of service and expertise than those who do not obtain this dual skill set, which differentiates me from other service providers. My decisions and advice are based solely on what is in the best interest of my clients. I use Real Estate Sales as a tool to make sure my clients get the home that meets or exceeds their needs. As a Mortgage Broker, I search for the best loans so I can offer lower rates and pricing than my financing competition. This certainly IS in the client's best interest.