Let’s talk insurance! Not exactly the sexiest topic in the world, I know. As a home owner or future home owner, it is important to understand insurance and have a grasp on what your insurance will do to protect you and your home.
**Disclaimer – I am not an insurance agent. This post contains my opinions and experiences with home owner’s insurance as both a consumer and licensed real estate agent.
I have spent the past couple weeks working on updating my buyer’s guidebook for all of my new buyer clients. While I was working on this, I came across the closing costs section, and I knew I had to go into more detail about the insurance aspect of closing costs. So here we are!
When you purchase a home, you are required to pay one year of home owner’s insurance upfront at your closing. This will protect your home for the first year you own it. After that, you have the choice to escrow (pay monthly) or pay out of pocket yearly to continue your insurance coverage.
I tell most of my buyers to budget around $1000 per year for their homeowner’s insurance. This is roughly what most of my buyers end up paying for a normal sized home in my area, but every home is different.
I recently came across a scenario where my buyer’s homeowner’s insurance was less than $300 per year. Hold the phone! What?! How did my buyer’s snag such a great deal when everyone else is paying a grand or more? It’s simple! These buyers live in a HOA that handles all of the exterior maintenance of their townhouse. When you live in a scenario similar to that, your insurance is insanely cheap compared to a normal home. Your insurance is only covering from the wall studs inward. All other home owners policies cover your exterior, and those are the most expensive parts of repair and replace.
All my fellow agents and home buyers out there, remember this when you’re running numbers for estimated closing costs or estimated monthly expenses. My buyers were able to save a big chunk of money when they were expecting to pay the normal $1000 per year.
I recommend that you sit down with your insurance agent once per year to discuss your coverage and deductible. I also recommend that you shop around for better prices once per year, ideally near your renewal date. If you are ever looking for recommendations for insurance agents, I always keep a list for referring to my clients and friends.
Thanks so much for sticking around and reading this blog. Enjoy the rest of your day!
XO
Dana Hathorn, Realtor PSA, Pre-License and CE Instructor
Coldwell Banker Real Estate Group
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