Home Buying 101: Why You Need Homeowners Insurance

December 4, 2017

What You Need to Know About Homeowners Insurance

Buying a home is one of the biggest investments you are likely to make. Aspiring homeowners, whether it’s their first time or not, know very well that the entire home buying process is not an easy road to take.

Every step is crucial. Each decision you’re going to make as you go along with the process will either make or break your goal of becoming a homeowner.

Despite the pressure, there are ways to help you avoid the hurdles that can possibly come your way.

Research, proper guidance from experts, preparation and patience are just a few of the many practices that every borrower should do when dealing and navigating the whole entire home buying process.

The Home Buying Process

Borrowers should always be familiar with the home buying process. Being knowledgeable helps set your expectations as you go along and it helps you ask the necessary questions to guide you every step of the way.

The National Association of Realtors created a step-by-step guide to help home buyers deal with the daunting process of home buying.

They did a rundown of specific actions under each step that home buyers need to consider doing to make the entire process go smoothly.
The steps are as follows:

1. Get Ready For Homeownership

The first step deals with preparing the important documents that brokers or lenders might need from you.

Building your credit is part of the process, too. Saving up enough money for a down payment and any other out-of-pocket costs are covered under this step.

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2. Find a Real Estate Professional

This is where home buyers begin scouting for real estate professionals that will help them look for a home to purchase. Friends, family, and colleagues can provide great referrals when seeking a trusted agent.

Home buyers should put this step as one of their top priorities when buying a house. This is something you should start doing even before you look for financing or find prospective properties to consider.

3. Find the Right Property

Looking for the right property to buy sounds easy but there are factors that home buyers should consider when choosing a home to purchase. The price and the neighborhood the property is in are just two of the many considerations you should look into before closing.

4. Finance the Right Property

Finding the right mortgage that works for you is extremely important. You have to go for a financing option that you can fulfill once the mortgage rolls out.

Look for a trusted broker or lender to help you with the application process and make sure you are familiar with the terms and the steps in getting a mortgage.

One thing that helps home buyers make the mortgage process go smoothly is getting a mortgage pre-approval. Lenders and sellers are likely to make business with serious home buyers.

5. Make an Offer

This is where you make transactions to home sellers. It pays to be confident and competitive when making an offer.

It also helps to have more than one prospect when you’re house hunting. It’s always possible for your offer to be declined so having a second option can save you time and a lot of grief.

6. Closing and Life After the Big Purchase

Once the sale closes, you can finally call yourself a homeowner. However, the journey is far from over. You still have important things to deal with.

This step includes all the repairs and preparations you’re going to oversee before you move in. Insurance policies also come in during this period. Consider getting the necessary coverage that you might need as a homeowner.

These policies protect you and your home from different natural and man-made calamities. There are also home insurance plans that provide coverage for someone who gets injured on your property.

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Why do you need Homeowners Insurance?

A smart homeowner should consider getting a homeowners insurance policy. Since buying a house is your largest investment to date, you need to have an insurance coverage that protects it from different vulnerabilities.

By definition, a homeowners insurance protects your home by covering possible losses to the owner’s home and its assets. The policy also provides liability coverage whenever an accident occurs in the home.

Mishaps and calamities happen. These policies protect your home from these occurrences. That is why getting a homeowners insurance should be a priority for the new homeowner. The home you bought and its specific circumstances will usually dictate the kind of insurance coverage you get.

You might have to look into the possible geographical vulnerabilities of your home or any structural aspects that might need protection. If you live near water, then flood protection is something that should be considered.

The standard homeowners insurance should include the basic coverage that your home needs. This includes the following:

  1. Dwelling coverage, which protects your entire home’s structure.
  2. Contents coverage, which provides protection to different items within your home.
  3. Personal liability, which protects a person when an accident occurs within the home.

Specific add-on coverages could be earthquake coverage, flood insurance, and other needed insurances. Other than homeowners insurance, there are a number of insurance policies that every homeowner should consider getting.

Make sure to ask from experts and shop around for insurance coverages. Some would even consult lenders and educate themselves on the different insurance policies to consider.

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Is Homeowners Insurance Included in the Mortgage Payment?

Yes. Homeowners insurance can be included in the mortgage payment. In fact, many lenders would recommend you to do so.

Situations like this require the borrower a year’s worth of their homeowners insurance premium to be added to their mortgage closing costs.

From there, your lender takes one-twelfth of the annual premium from your monthly mortgage payments.

However, there is still an option to pay homeowners insurance premiums directly to the insurance provider if you prefer to keep it separate from your monthly mortgage dues.

You’re still part of the equation.

It still pays to keep your home safe in your own ways. Natural disasters are something you can’t control and they can be covered under your policy but there are still other ways to protect your home from other unfortunate possibilities. These measures don’t have to be extreme, especially if it can cost too much for you.

Simple weatherproofing can go a long way. Keeping an updated home inventory has its perks. Also, you can invest in making sure your homes’ hallways or stairways are free of different obstacles like loose steps or broken tiles. You can also install proper lighting equipment and reliable security systems to add a layer of protection to your home.

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