2 reasons you need Homeowners Insurance when applying for a Mortgage
March 4, 2019
Many people shopping for a new home may not have insurance on their mind, but it’s a good idea to think about insurance as soon as you find the home of your dreams.
Unless you are paying cash for your new home, you will need to apply for a mortgage loan to complete the purchase. Home mortgage lenders have many requirements, and a few relate directly to home insurance:
Most lenders require that borrowers purchase homeowner's insurance and provide proof of insurance at closing.
Most lenders require that home insurance premiums be included in calculating the housing expense ratio. This ratio is one part of the underwriting process used to determine how much a principal a borrow is eligible to take out. So, the lower the premium, the better.
The mortgage loan pre-approval process is a good time to shop around for the best insurance premiums and coverage for your new home. Check out options from different insurance companies or use an independent insurance agency that can provide you with competing quotes from multiple insurance companies.