What Rising Homeowners Insurance Costs Mean for Your Mortgage

If you've been gearing up to buy a home, you've likely heard about rising costs–not just home prices and interest rates but also insurance premiums. If you're navigating a unique loan situation or a strict budget, understanding how homeowners insurance impacts your mortgage can help you get more financially prepared.

Here's everything you need to know about rising costs, why home insurance and mortgages go hand in hand, and what you can do to maximize affordability.

Why Are Homeowners Insurance Premiums Increasing?

Several factors are playing a role in driving up homeowners insurance costs across the country, including:

• Inflation
• Shifts in the insurance market
• Natural disasters
• High rebuilding costs

As insurance companies pay out more in claims, they raise premiums to help balance their risk–but unfortunately, that cost is passed along to homeowners, including first-time buyers.

How This Impacts Your Mortgage

How does home insurance work with a mortgage? It's actually part of your monthly payment, which means if your premium is higher than you anticipated, your monthly payment will also be higher than expected. Rising homeowners insurance costs can impact:

• Loan approval: More expensive monthly costs affect your debt-to-income ratio–a key factor lenders use to decide if you qualify for a mortgage.
• Affordability: A home that once seemed within reach may feel like a financial stretch once homeowners insurance is factored in.

What Can You Do?

The good news is that you have options. Here are a few tips that could help you plan ahead and protect your financial health.

Shop Early

Don't wait until the last minute to learn about mortgage home insurance requirements and explore options! Give yourself plenty of time to compare policies and prices.

Get Multiple Quotes

Rates can vary from one provider to another, and a few phone calls could save you hundreds.

Budget For It

From the moment you start looking at homes, factor the cost of insurance into your monthly payment estimate. That will help you avoid any unpleasant surprises down the road.

Ask for Referrals

A reputable mortgage lender (like us!) can connect you with trusted insurance providers who understand the needs of first-time buyers. What's more, the team here at JustChoice Lending doesn't work on commission. That means our advice and recommendations are always in your best interest.

Plan for Ongoing Costs

Unfortunately, homeowners insurance isn't a one-and-done expense. It can increase year over year, making it imperative to plan ahead. Be sure to:

• Budget for future increases: Build in some wiggle room when thinking about your long-term financial plan.
• Expect an annual escrow analysis: Every year, your lender will review your escrow account; if your insurance goes up, your mortgage payment might adjust to cover it.
• Regularly reassess coverage: Prices aren't the only things that can change over time–your needs evolve, too. Regularly review your policy to ensure you're not under-covered or overpaying.

Let's Find Your Affordable Path to Homeownership

Buying a home can feel overwhelming, especially when faced with unexpected costs. But you don't have to figure it out alone! Whether you're wondering about the home insurance requirements for a mortgage, need down payment assistance, or simply exploring your financing options, JustChoice Lending is here to help. Connect with us to get started!