Homeowners Insurance Tips To Consider When Refinancing Your Mortgage

Refinancing to get a better interest rate or refinancing with cash-back can help you save money and help you to upgrade or repair your home. There are some things to consider for homeowners insurance if you are deciding to refinance your home.

A New Appraisal Can Help Determine the Right Amount of Coverage

In simple terms, an appraisal is a process of having an unbiased, professional opinion to determine the value of your home. Even though it is based on opinion, the appraiser would base the estimate on certain metrics such as the common price per square feet of other homes in the area, and certain amenities within the home.

With refinancing your mortgage, you are going to get an appraisal of your home. This is great news because you will need to know how much coverage you should get to cover repairs and replacement costs for your homeowners’ insurance. In addition to your home’s value changing over the years, construction costs have also risen. It is important to make sure that if something catastrophic were to happen to your home that you would have full coverage to entirely replace your home at modern cost levels.

There are tools and websites out there (such as Zillow) that estimate the value of your home fairly accurately, but they can’t take the place of a real appraisal to determine the real value of your home and property. It is important to make sure that you are covered for the right amount because you don’t want to find yourself in the future coming up short when it comes time to fix your home.

An appraisal is not to be confused with a Replacement Cost Estimate (RCE). A replacement cost estimate is a tool used by the insurance company to estimate the cost to rebuild only your home including labor and materials.

You Can Start Shopping for New Insurance Rates Any Time

There’s a ton of stress considering the volatility of interest rates. Should you lock your interest rate now or should you wait till next week or next month? These are important questions, but saving money on shopping for new homeowners insurance quotes is not dependent on, nor as volatile, as mortgage rates. Start shopping now to get prepared for your new mortgage.

Many have used a mortgage broker to shop different mortgage rates and fees, but also consider using an insurance broker such as Alliance. Insurance brokers shop the best rates for your needs. We also utilize highly rated insurance companies that are rated for their financial stability. This is a great time saver on your end and allows you to spend time with the family or getting the other necessary requirements lined up for refinancing your mortgage.

If you don’t follow through with refinancing your mortgage, then at least you will be satisfied by saving money when shopping for new homeowners’ insurance rates.

Now is a Good Time to Take Inventory

I am sure there have been a lot of changes since you first bought your home. Most of us do not think about the impacts it has on our homeowners’ insurance. You could ask yourself questions like are the kids driving or going to college? Did you get a trampoline? Did you get a dog? Did you start a new job? Are you getting closer to retirement?

These questions and many more are important to answer when you take inventory of what’s happened in your life. Documenting these changes can help insurance brokers bundle your homeowners, car, and life insurance policies to give you a “bulk” discount. All these life changes happen over the years and it’s time to reassess all of it.

In addition to life changes, you probably made major purchases such as jewelry, electronics, and appliances. Cataloging these purchases and passing on the information to your homeowners’ insurance company is crucial if you were to ever need to recoup the costs. They will need to evaluate your policy limits and determine if you have the right coverage to cover anything that was damaged, lost, or stolen.

Consider Cash-out For Items in Need of Repair

There are some home improvements that can potentially lower your homeowners’ insurance costs. Some examples include replacing your roof, installing new plumbing, upgrading electrical wiring, installing a security system, getting a generator, and installing storm-safe windows.

If your home or goals for your family, has already considered some of the items listed above, then now is a great time to take advantage of lower mortgage interest rates to improve the quality of your living and help out your wallet. Getting a new roof alone could save you between 5% – 30% on your homeowners’ insurance policy premiums.

When replacing your roof, you can also consider energy-efficient shingles. There are other types of roof materials that are considered impact resistant that can affect the price of your homeowners’ insurance as well. All roofs have an estimated life expectancy. Replacing your roof can open your market availability providing more options for lower rates. Talk to your roofing contractor and insurance agent to understand what roofing materials help you save on costs.

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