When home-buyers look at potential properties to buy, they usually check out the construction quality, layout, and community, without regard to the insurance costs.
However, experienced home loan specialist in Oregon Primary Residential Mortgage, Inc. warns that failing to account for insurance costs could negatively affect your monthly budget, especially if you’re taking out a mortgage to buy a home because higher insurance premiums would substantially add to the cost of home-ownership.
So what do you need to look for when purchasing a home? Here are some guide questions to knowing the answer to this. Is the house made of wood or brick? Brick houses usually have more affordable premiums.
How old is it? Older houses have higher premiums, vice versa
What about the roofing? Newer roofing equals lower premiums, more so if the material is fire-resistant — metal, rubber, or asphalt, for example.
- Does it have a swimming pool? Houses with pools also have higher premiums.
- Does it come with a security system? If yes, you need to pay 5% less, plus an advanced indoor sprinkler system can save you up to 20% in premiums.
- Is it in a busy area? If yes, there’s a high chance that a vehicle might hit your house, so the property is in a high-risk area.
- What about the crime rate? As you might have guessed, if the crime rate is high, you’ll get high premiums.
- Is it in a flood-prone area? Basically, you might need more coverage, hence higher premiums.
- Is it in a hurricane-prone area? If yes, does it have features that could protect the house against hurricanes? If so, you’ll pay less, and if not, you’ll pay more.
- What about the property’s insurance claims history? Essentially, you’ll get higher premiums if the property has a history of multiple claims.
- How’s the wiring and plumbing? The newer the wiring and plumbing, the lower your premiums will be.
You don’t have any control over most of the factors, such as the age of the property. The good news is that you have some control over some of them and could make improvements to try and reduce your insurance premiums.