Shop for Home Insurance
After you submit your mortgage application, you will want to shop around for homeowners insurance. One stipulation for receiving a clean commitment letter from your lender will be to have Homeowners Insurance in place. The best place to start is with your auto insurance company. They will likely offer a bundle discount, which will likely be your cheapest option. It is always important, however, to shop around. There a lot of variables that go into the cost of your insurance policy. Check out these tips to lower your costs.
Homeowners insurance is mandatory to close your loan and it is something you must maintain as long as you have a loan. If you drop your coverage or reduce your plan that is inadequate for your lender’s criteria, they can get a force-placed insurance policy and charge you for it.
Coverage for condos varies from single-family homes. If you are buying a condo you will need request from the seller documentation of the master insurance policy. If the master policy is a “walls out” policy, you will need to get your own HO-6 policy that covers the structure of your unit. If the master policy is “walls in,” you will just need a policy that covers your belongings. When you are fully covered under a homeowners policy, regardless of condo, single-family, or multi-family, you will be covered for the structure of your property, your belongings, and liability.
Flood insurance is separate from homeowners insurance and your lender may or may not require you to get it. Based on your risk level, the cost of flood insurance can vary. Make sure you understand what your homeowners policy covers and your risk of flood based on your property’s location when deciding whether or not to get flood insurance. If your property is considered to be at high risk of flood your lender will require you to get flood insurance and you will have to get a standard policy.
You may find yourself in a situation where private insurance companies are unwilling to offer you a policy. This may be the case if your home has outdated plumbing or electrical systems. Or you may have a pet that certain insurance companies ban. If this is the case for you, you will have to look into the Massachusetts FAIR plan, which is offered by the Massachusetts Property Insurance Underwriting Association. This plan will be more expensive than a private policy, but it ensures that everyone can get coverage.