HOW MUCH INSURANCE DO YOU NEED?

Many people decide that their insurance payment will only raise their escrows and cause too much strain on the old monthly payments. Most people search for the lowest possible rates when qualifying for a home loan, and usually they should. However, your house will not always be worth the same amount as the day you bought it.

Customer X bought her home several years ago for $87,000. Believe it or not, that home has greatly appreciated over the years. The house is now worth over $200,000. If she were to continue with the initial coverage on her home, she could not replace what she now owns with her insurance money because, guess what----all other homes have appreciated right along with hers. If she should lose her home to fire or tornado, etc., she would probably have to sell her lot and rent until she could start over again and buy a much smaller home.

Look at all the possibilities and plan for the worst contingencies. If your lender does not require flood insurance on your dream home, but it is very close to a suspicious water source, culvert, or low lying area, you might consider buying the insurance anyway. You can always wait until after closing if you are worried about qualifying for the loan, but if you think you MIGHT need it, you might CONSIDER buying that insurance to protect your home.

Work with a reputable company and explore all your options. Keep up your insurance maintenance just like you keep up your aesthetics. It will pay off in the end.