Buying a home is a big investment. You likely save for a long time, and will invest a lot of money into a new nest.
Whenever you buy a home, you usually have to pay off the home over time. If you live in Texas, you’re looking at an average cost of $250,000, according to Zillow. You may pay higher or lower than the state average for your home. But, you still have a responsibility to maintain payments of the home.
Affording a Home
Very few of us pay for a new home in its entirety when we sign for the property. Many home buyers choose to finance their homes with a bank in the form of a mortgage. A mortgage is essentially a loan of money from the bank that covers the cost of the home.
Each month, a home buyer is make a payment to the bank to pay off the cost of the mortgage. You don’t completely own your home until you pay back the entire mortgage. Depending on the type of loan, homeowners may be able to refinance or change the mortgage as time goes on.
Having a mortgage can affect your home insurance rates. It is important to understand your home insurance options if you carry a mortgage.
Mortgages and Home Insurance
Depending on your mortgage lender, you may have to carry home insurance on your property. Many banks require home insurance as a way to protect their own financial interests in a property while they carry the mortgage.
Home insurance typically protects:
- Dwelling coverage: This protects the home’s structure in case of damages from a covered peril. Such perils may include fire, theft, vandalism and severe weather. It can also protect detached or attached structures on the property, and the land on which the home sits.
- Personal property: Your home’s contents could sustain damage in a peril. Home insurance generally covers your personal property up to a certain value.
- Personal liabilities: Covers you in case someone gets hurt in your home. It can sometimes also cover damage you cause to someone else’s personal property.
There are many other dwelling-specific coverage types that may help protect your home.
Your mortgage lender and your home insurance agent can help you get the correct policy. Most mortgage lenders require the homeowner to carry coverage up to the value of the home.
After you’ve paid off the mortgage, you may have the option to stop carrying home insurance. However, this may not be the best idea. Without home insurance, you could face large financial losses in case of home damages. But, you may be able to reduce or change your home insurance after you pay off the mortgage to better meet your personal needs.
Raymond Longoria Insurance can help you get the right amount of home insurance to meet your mortgage needs. Get in touch with us today at (888) 296-0345 for more information.