With all the hullabaloo surrounding a new home purchase, it can be easy to forget important details like homeowners insurance. But chances are, you won't be able to settle your mortgage until you secure coverage for your new abode. Find out why.
Technically, no. If you're paying your home off in cash, that is.
If you're like the rest of us and need to finance your new place, your lender will more than likely require that you purchase at least some homeowners insurance before settling on your mortgage. In most cases, you'll be asked to provide proof that you've prepaid one year's worth of coverage before the lender will consider closing.
Just like financing or leasing a car, your lender holds a lien on your house until you've paid off your mortgage. To safeguard what's technically their property, lenders often want you to purchase financial protection in the form of a home insurance policy, just in case something bad happens.
This amount will vary depending on what your lender requires, but they'll generally want you to carry enough coverage to pay for the cost of rebuilding your home from the ground up (at the very least), should disaster occur. There are plenty of other factors to consider, too.
A standard homeowners insurance policy generally protects you against hazards like:
And that's just for your home itself. With Esurance homeowners insurance, you'll also get automatic coverage for your liability, personal belongings, other structures on your property like carports and fences, additional living expenses if your home becomes temporarily unlivable, and more.
Since most lenders tend to require that you prepay one year's worth of home coverage before you'll be able to close your mortgage, it would help to know that you benefit in some way from this sometimes-hefty upfront cost, right? Right.
Paying your homeowners insurance premium all at once (and before closing) allows you to exclude that premium from your closing costs — which generally include lender and other fees that you're responsible for in addition to your down payment. Closing costs are generally paid in one lump sum.
Additionally, you may choose or be asked to set up an escrow account depending on your mortgage agreement, to avoid paying large sums all at once for homeownership costs. Essentially, an escrow is a savings account designed to help you pay your mortgage, property taxes, and even homeowners insurance in smaller, periodic installments. Your lender usually deals with payments from your escrow, which means much less stressful financial management for you.
We can help you take some of the hassle out of the home-buying process by assisting you in securing coverage for your home well in advance of closing time.
And with Esurance home insurance, you can rest easy knowing you're protected by a proud member of the Allstate family. Speak with our licensed agents at 1-866-439-5633 or get your free quote online today!
Furnish your new castle with reliable homeowners coverage from Esurance.
Or speak with our licensed agents at 1-866-439-5633.