Buying a new home is an important investment, and so is getting the right homeowners’ insurance. Purchasing the right insurance is not as simple as picking a company and getting the policy going. Here are a few things you should know before settling on a homeowners’ insurance policy.
Homeowners Insurance
If you are buying a home, there’s no question that you need homeowners’ insurance. When shopping around for homeowners’ insurance, the first thing you should be aware of is the type of insurance you need. First, you want to make sure that it covers your home as well as the contents of the home. Next, you will want to make sure you get replacement value insurance so that, in case of damage or destruction, your home and items are fully replaced rather than you simply fetching the current market value after depreciation.
Mortgage Insurance
Mortgage insurance is paid for by the homeowner but provides protection for the lender in case the homeowner defaults on the loan. Depending on how much of a down payment you are able to make, you may be required to have mortgage insurance. This usually occurs when you put down less than 20 percent. The length of the loan can also affect whether you need mortgage insurance or not as well as how much insurance you will need. There are some cases where you will need mortgage insurance even if you put down 20 percent or more. For example, with an FDA or a USDA loan, you will be required to have mortgage insurance.
Shop Early for Insurance
Many people are unaware that you must have homeowners’ insurance before closing on a house. This results in people scrambling to get same-day insurance and possibly missing out on better rates. Shopping early for insurance allows you to compare many different insurance companies so that you can be sure to get the coverage you need as well as the coverage that fits into your budget. You may even be eligible for discounts for being an early bird.
Being informed is the best way to make sure you get a great homeowners’ insurance policy. The tips above are good starting points and will get you going in the right direction as you compare different companies. No matter what type of property you are buying or the type of mortgage you are getting, there is a perfect insurance policy out there for you.