Buying a home is expensive enough as it is without throwing unnecessary expenses into the mix. Unfortunately, some homeowners are paying much more than they need to for home insurance. Hidden insurance costs can cost you anywhere from $50 and up each month, and these costs need to be eliminated as soon as possible. Homeowners also have a habit of insuring their home with their car insurance provider without finding out if that’s really the best rate or not. Here are a few ways to avoid paying more than you need to for home insurance.
Both new and current homeowners need to shop around when it comes to home insurance. Whether you’re buying a home and are in search of a new policy or if you have a policy and just want to save some money, getting quotes from several companies can show you how much you can save. The costs can vary by as much as a couple hundred dollars each year, and that’s a significant amount of money to just throw away.
The most common way homeowners pay more than they need to is with private mortgage insurance (PMI). This, too can cost homeowners anywhere from $50 – $200. What is private mortgage insurance? It’s an insurance policy that your lender requires you to pay for because it partially reimburses them if you default on your mortgage. Whether you are required to pay this is determined by your loan to value ratio. The ratio is calculated by dividing your mortgage by your home’s current value. If this ratio is more than 80 percent, you must pay PMI. To avoid this charge, pay a greater down payment when purchasing a new home. If you’re already living in the home, pay more toward the principle each month until you have more equity in your home. By eliminating this extra home insurance expense, you can save a significant amount of money on your home loan.
Improve Your Credit Rating
Homeowners who want to save money on home insurance need to check out sites like http://insuranceprofy.com/ to find the best quotes. The quotes given take into consideration several things: the value of your home, the value of the contents inside your home and your credit rating. Like other types of insurance products, the better your credit rating, the better your insurance rates will be. To improve your rating, pay your bills on time and keep your credit usage to a small percentage of your credit limits. Avoid getting many credit cards or having excessive credit limits.
These are three of the easiest ways to save a little money on your home insurance. The most important thing to remember is not to skimp on coverage. Your home is your largest investment and should be well protected in case of a disaster such as a fire, flood, storm or theft. You don’t have to compromise coverage to save a few dollars; the goal is to find affordable coverage that gives you the greatest amount of protection for your money.