Have you been considering buying a home in the near future? Are you currently making out a budget to ensure that you have everything accounted for? Although most people realize that a house is going to require paying things like the electricity and the water bills, there is one thing that can be easily overlooked when mapping out a budget: insurance. Since it's not always necessary when renting a home, insurance may be easily forgotten by many people But there are a number of compelling reasons why you need to make sure that you have enough money in your budget to cover this. Some of the most important reasons include:
Getting the mortgage: Before you can finally sign the last mortgage paperwork, the lender is going to want proof that you have home insurance. In the event of a fire, flood, or some other disaster, the lender wants to know that they will be compensated for the loss of the property. Without any insurance at all, it'd be all too easy for property owners like you to simply walk off and leave the lender with a property that isn't sellable due to damage or destruction.
Affordable repairs: While you're renting, you may not care much about your personal belongings being destroyed as long as you have somewhere to live. Should something happen to the rental property itself, the property manager or owner is responsible for enacting repairs. If something like a fire should happen, you can simply move to a new apartment complex instead of worrying about the damage. Once you own your house, the damage is now something that you need to deal with. But without sufficient home insurance, something like a burst pipe could result in repair costs that are too expensive to repair out of pocket but that need to be done in order to be able to continue living in the home.
Having choices: As long as the home insurance policy you get is one that has sufficient coverage for the property in question, the lender doesn't care what insurance company you use. However, some people try to pay for insurance for a little while and then stop paying in order to save a little money. If you do this, your choice in the matter goes away. Once the lender finds out that you no longer have insurance, the paperwork that you signed will enable them to purchase and pay for insurance in your name, adding the cost to your monthly mortgage payments. If this happens, you no longer get to choose what insurance you have, what policy you have, and you won't be able to switch to a different company if you should happen to find a better rate.