First Time Home Buyer | How to Find the Best Insurance Policy
Don’t Stress, Start Early
Being a first time home buyer can be a very stressful time. Mortgage companies are very specific and strict on the types of documents they will require for a closing. Insurance happens to be one of the main requirements that can be very stressful. With many deadlines and requirements, make this part of the process easy on yourself.
Get Several Quotes
First and foremost, if you have current auto insurance start by getting a quote through your current company. There are very good discount for bundling your insurance policies together. After getting a baseline quote through your current company, I would suggest getting at least 3 more quotes, and make sure that you are also quoting the car insurance as well. Use the first quote as your template for coverage. If you are taking out a mortgage there will be certain requirements the bank will need the policy to meet. The good news is that all of the major companies follow these guidelines.
How is your Credit Health?
This seems obvious because you have probably been through this while attempting to get a mortgage. Companies use what is called an ‘Insurance Score’ for rating purposes now. This is basically consumer credit information. This helps companies determine your propensity for making a claim. The better the insurance score, the lower the premium. Basically, if you have good credit you will receive a lower rate. This should not effect your credit score. Make sure to verify with the insurance companies that they are not running a ‘hard’ credit inquiry.
Take a Higher Deductible
As a first time home buyer you shouldn’t be afraid to take a higher deductible. I know it can be scary to think about having to possibly come up with $1,000 for a claim right after purchasing a home. In most cases you have depleted your savings account for a down payment on the home. The fact is home insurance claims happen much less frequently than you think. If the damage to your home is under $1,000 you shouldn’t be filing a claim anyway. Start with at least a $1,000 deductible and if over time you never make a claim, you can raise it. Remember to revisit your policy every year to make adjustments to reduce premium! Most companies also offered discounts for brand new home’s and new roof’s. If you are a new home buyer usually you are eligible for a claim free discount as well.
Get a Binder and Paid in Full Receipt
When purchasing a mortgage, homeowners insurance is required. To prove that you have obtained it mortgage companies will ask for a ‘Binder’ and ‘Paid in Full’ receipt. Most of the major companies can, and will provide the mortgage company with this information directly and immediately following your purchase. I would recommenced purchasing the home insurance at least a couple weeks before the scheduled closing date. If there are any discrepancies that need to be worked out it gives the insurance and mortgage company time to iron out these details. You do not need to have an exact closing date to purchase home insurance because the company can change the date post-purchase to reflect your actual closing date. After you have chosen a home insurance company it is best to have the mortgage and insurance company interact directly. This whole experience will be overwhelming for a first time home buyer so utilize your respective companies and have them work together. Both companies will have the customers best interest in mind and will act promptly to get everything completed.
So To Recap:
Get several quotes. (starting with current car insurance company)
Take a higher deductible.
Buy the insurance a couple of weeks before closing.
Get a Binder and Paid in Full receipt from your insurance company.