Insurance Agent Helping first-time homebuyers understand and select an insurance agent for their first home.

Insurance Agent
Both you and your lender have a lot invested in your first home and you need to have homeowner's insurance, also know as hazard insurance, coverage for the home.    It will be your responsiblity to research and select an Insuance Agent and policy a few weeks prior to purchasing your home.

Comparing Insurance Agents
It is a good idea to speak with a few different insuance agents to compare their quotes and coverage. To make sure you are doing a fair comparison you will need to make sure the deductibles and the coverage type are the same.

You will need to make sure that you are shopping for a policy that will be acceptable to your lender. Mortgage lenders have limits on the maximum deductibles you can get and and the minimum amounta of coverage that is required.

When shopping for insurance on your first home you should speak with the insurance agent who currently provides your car insuance as there are often discounts provided to you if you have multiple policies with the same insurance company.   Don't stop there though, as rates do vary, as well as, the quality and strength and services offered by each insurance company.

Obtaining an Insurance Policy
Once you have settled on an insurance agent and policy, you will need to provide your lender the agent's contact information. The lender will work directly with the insurance agent to obtain an insurance binder. As a part of closing the loan, the lender will collect the annual premium for the policy and pay the insurance company directly from loan closing. For this reason you do not and should not pay the insurance agent seperately prior to closing your loan.

Once you begin making your house payments most lenders will start collecting 1/12th of your annual insurance premium. They save these funds in an escrow account, also known as an impound account, so that when it comes time to pay your annual insurance premium,  they have enough money to renew the policy and pay the annual premium. Some lenders and loan program will allow you to pay the insurance on your own if you prefer to do so, but many will not.

If for any reason your homeowner's insurance expires, your lender or mortgage investor will obtain a policy for you and charge you for it. These types of lender-initiated insurance policy are very expensive and should be avoided at all costs.