Before You Finalize Your Mortgage Payment, Get the Insurance Quote
When you’re buying a home, it’s easy to focus on the purchase price, interest rate, and down payment. But there’s another important piece that can have a significant impact on your monthly payment: homeowners insurance.
That’s why it’s a good idea to get an insurance quote early in the home-buying process, before you finalize your budget or assume you know exactly what your monthly payment will be.
Here are a few things to look at:
1. Annual Premium
The annual insurance premium is typically included in your monthly mortgage payment when your loan has an escrow account. Even a difference of several hundred dollars per year can affect your monthly payment.
Getting a quote early gives you a more realistic picture of what the home will cost each month.
2. Deductible
Don’t look at the premium alone. Pay attention to the deductible as well.
A lower deductible may mean a higher premium, while a higher deductible could reduce the premium but leave you responsible for more out-of-pocket costs if you have a covered claim.
Make sure you understand what you’re comfortable paying before choosing a policy.
3. Required Coverage
Your lender will have certain insurance requirements that must be met before closing. The amount and type of coverage can depend on the property and the loan.
Your insurance agent and mortgage professional can help make sure the policy meets the lender’s requirements.
4. Roof or Property Condition Concerns
The condition of the home can affect whether an insurance company is willing to insure the property and how much the coverage will cost.
The roof is especially important. Its age, condition, and remaining useful life may raise questions with an insurance company.
Getting the quote early can help uncover potential issues before you get too far into the transaction.
5. Local Risks
Insurance costs can vary significantly depending on where a home is located.
Depending on the area, factors such as wind, flooding, severe storms, wildfires, or other local risks may affect coverage and premiums.
Ask your insurance agent what risks are most relevant to the property you’re considering and whether additional coverage may be recommended or required.
6. How the Quote Changes Your Total Monthly Payment
Finally, take the insurance quote and look at the whole payment, not just the principal and interest.
Your estimated monthly housing payment may include:
Principal and interest
Property taxes
Homeowners insurance
Mortgage insurance, if applicable
HOA dues, if applicable
A home that looks affordable based on the purchase price alone may have a different monthly payment once all of these costs are included.
The Bottom Line
Don’t wait until the last minute to find out what homeowners insurance will cost.
Getting an insurance quote early can help you spot potential issues, understand your coverage, and make sure the home fits comfortably within your budget.
Before you finalize the numbers on your next home purchase, ask your mortgage professional and insurance agent to help you look at the complete monthly payment—not just the mortgage payment.
A little preparation upfront can help prevent an expensive surprise later.