How to Get the Best Homeowners Insurance Policy for your Needs

Home Insurance

Are you buying a new home? Or just considering your options to keep your existing home protected with the right coverage? No matter at what stage of homeownership you are in, getting adequate home insurance is critical to saving your investment in case of any unexpected disaster like fire or flood.

When you look for the homeowner’s insurance policy, there are different types of plans that are available in the market. And finding the right home insurance coverage is not an easy task without proper knowledge and expert assistance from a professional insurance broker.

A home insurance policy can cover all kinds of damages because of any disaster and you must be aware of that before selecting your policy. Here’re the five key items you must include in your policy for financial protection in an emergency:

Dwelling coverage

Dwelling coverage in your home insurance policy provides financial protection for the actual home structure against any damage. If the structure of your house is damaged or destroyed due to any disaster, dwelling coverage covers the cost of reconstruction or repairs. Some disaster events are not included under this coverage, so make sure to read through your policy before making a final decision.

The premium cost of dwelling coverage depends on the local construction rates and materials cost to rebuild a property. You need to keep an eye on the current market rates for the following factors to update your dwelling coverage regularly.

Contents coverage

As the name suggests, contents coverage in your home insurance policy provides coverage to the personal items and belongings in the house. These belonging could include anything from furniture to clothing, electronics, appliance, paintings, and other decorative items. This coverage covers the cost to replace your damaged, stolen, or vandalized belongings after any event mentioned in your policy. There are certain limits on the costs of your belonging under this coverage and you should make sure it with your policy provider before the purchase.

Liability coverage

Liability coverage provides you protection during a lawsuit and covers the legal fees of the lawyer and court proceedings in case you are sued for an accidental injury or damage to someone on your property. This coverage covers the cost of any settlement granted to the victim after the lawsuit to protect you from any financial burden

Loss of use coverage

This coverage covers your living cost in case you have to leave your house after the damage caused to it due to any natural disaster or any other event. Events like tornados, hurricanes, or pest or mold infestation can enforce you to leave your house – then the loss of use coverage covers your living expenses on hotels, food, and other basic needs of life.

Additional coverage

In addition to the four basic coverages mentioned above, you have the option to consider certain add-ons in your home insurance policy. For example, if you live in a flood or earthquake-prone area, you can include a separate coverage under this category. You can also consider getting business coverage in case you operate a business from your home and want to protect it under your existing home coverage. Theft coverage is also another add-on that you can add to your policy to cover your financial losses due to events like theft.

These are the basic coverage plans that you must consider in your home insurance policy for complete home coverage against financial losses due to a disaster. Take your time to identify events that could cause damage to your property or belongings and consult with a professional insurance broker to build the right home insurance policy as per your unique requirements.

Five Questions You Need to Ask of Your Mortgage Lender Before You Sign on the Dotted Line.

Mortgage Insurance

The only thing that most people care about before signing a mortgage loan is the monthly payment. However, this is not the only important factor you should consider. To avoid any surprises, it is essential that you ask any mortgage-related questions that come to your mind. Today, we are sharing some additional questions that you must ask of your mortgage lender in advance so that you are secured and well-informed.

  1. What type of mortgage loan is best for me?

Different kinds of mortgage loans are available to meet the unique requirements of borrowers. For instance:

  • Fixed-Rate Mortgage – the interest rate never changes until you repay the mortgage loan fully
  • Adjustable-Rate Mortgage – the interest rate varies based on the market but not usually within the first 5 years
  • Interest-Only Mortgage – need to pay the loan interest only for a certain period and the principal amount is repaid either in subsequent payments or in a lump sum amount at the stipulated date
  • Negative Amortization Mortgage – the unpaid interest is added to the balance of the unpaid principal amount

Each of the mortgage loans comes with its pros and cons. Ask your lender to explain each of them so that you can determine which one is right for you.

  1. What is the Interest Rate and Annual Percentage Rate (APR)?

Interest Rate is the amount that you need to pay each year for borrowing the money. It doesn’t include any fees or charges.

On the other hand, the Annual Percentage Rate is the amount that reflects different costs, such as interest rate, mortgage broker fees, and other additional charges that you may need to pay for securing the loan. Consequently, the APR is always higher than the interest rate.

Before choosing the best mortgage loan for you, you must know both of these rates. Be careful while:

  • Comparing the APRs of different adjustable-rate loans
  • Comparing the APRs of fixed-rate loans with APRs of adjustable-rate loans

If your priority is the monthly payment, you should focus on interest rates. However, if your priority is the overall mortgage loan amount, you should focus on the APR.

  1. Is there any grace period after signing the mortgage paperwork that I can back out of the mortgage without a penalty? 

Not many people know that they have the right to cancel certain types of mortgages without a penalty after signing the mortgage paperwork. Verify with your mortgage lender if their mortgage policies allow you to do so.

If yes, then ask:

  • How much grace period do they provide to reconsider the decision?
  • Are there any conditions that can influence the applicability of the grace period in your case?
  • What do you need to do if you decide to back out? Is there any paperwork? What mode of communication should you use to notify the mortgage lender?
  1. Is there any penalty for the early mortgage payout?

Repaying your mortgage loan in full as early as possible seems like the best and economical decision. However, some mortgage lenders penalize their borrowers in case of early payout. Ask them how they calculate the penalty and at what rate.

Prepayment penalties can be calculated based on a specific percentage of a mortgage loan or the equivalent of a certain number of monthly interest payments.

Some penalties are applied only during the first two to five years. So, get the complete clarification because it can save you thousands of dollars.

  1. Do I need to get Private Mortgage Insurance?

You might need to get Private Mortgage Insurance (PMI) when you put down less than 20% on a conventional mortgage loan. It is meant to protect your lender in case you default on the mortgage loan.

Besides, you should also ask how much PMI will affect your monthly payment and see if it is better to make a larger down payment (if you can) or you should consider switching loan programs.

New Age Insurance Brokers is the leading Dubai-based insurance broking company that provides comprehensive consultation for all types of insurance and investment solutions, including house and mortgage insurance. If you have any queries or doubts, please feel free to contact us.

Happy Mortgage Shopping!