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Identical coverage, by the same company will be the same price mortgage free or with mortgage. Price of insurance, is based on the potential loss the insurance company may have.
However, insurance can cost different, between 2 or more insurance companies.
I was debating with a friend of mine about buying a house with all cash or with mortgage
And he said apart from savings from not paying interest and closing costs, I will also be paying less for home insurance if I own the house with no mortgage.
Is this correct?
It is not true. Unless of the mortgage company will not let you select a cheap insurance company. Generally you can pick the insurance company you want. You should shop around for rates.
If you do not have a mortgage, you do not have to have insurance at all. In that case, if there is a natural disaster or a fire, you will have to pay to have the house rebuilt. You should check to see if it is worth it for you. Sometimes even if you have insurance the company will refuse to pay you if there is a flood or sewage backup.
As someone also mentioned, if you pay for your insurance yourself, you can have a high deductible that the mortgage company may not allow. For instance, can you afford to pay for 40K in repairs? If so, then you can try to get a big deductible and pay less per month for the insurance.
I found out the hard way that it does not pay to use insurance for small damages. The insurance company will not pay for all of the damages, and they will increase the monthly payment you have to pay for several years because you used it.
Actually, I am an insurance agent, and ratings are different with each company. Some factor in some random things, some don't give a hoot. With one carrier, if I put you have 3,699 square feet, you pay more than if I input 3,700 square foot. One charges more per bathroom. One rates you on what you do for a living. One cares if your single by divorce or death. With one you pay more for a replacement cost of 251,999 than you would for 252,000. The majority of my clients have mortgages, and that is default when I rate. With most of my carriers, it doesn't make a difference, but it does with one in particular, and they actually INCREASED the premium without a mortgage. Boy, was I ticked off, as I already had applications signed and had to go back to the client to apologize for ASSuming.
So in short. ..yes, it is possible, but not normal.
I have a small mortgage on a property I own in WV. the locals there pay a few hundred a year for insurance. My insurance company insists on FULL rebuilding cost. So a house that cost me 36K is insured by them for $450K and the cost per foot they are using might be true in my Cape Cod Home but is no where near the cost of rebuilding in upper WV. But they will not budge on it, so we pay probably 5 times at least what the neighbors there are paying.
and I cannot switch companies as long as I own my Cape house, since most companies want to avoid the Cape due to hurricanes, my deductible on that house went to $15,000. While the premium also increased. So for now I have both houses and all my cars under MET.
I have a small mortgage on a property I own in WV. the locals there pay a few hundred a year for insurance. My insurance company insists on FULL rebuilding cost. So a house that cost me 36K is insured by them for $450K and the cost per foot they are using might be true in my Cape Cod Home but is no where near the cost of rebuilding in upper WV. But they will not budge on it, so we pay probably 5 times at least what the neighbors there are paying.
and I cannot switch companies as long as I own my Cape house, since most companies want to avoid the Cape due to hurricanes, my deductible on that house went to $15,000. While the premium also increased. So for now I have both houses and all my cars under MET.
I don't know any carrier that DOESN'T insist on full replacement value. All homes are insured at replacement cost, not market value.
I don't know any carrier that DOESN'T insist on full replacement value. All homes are insured at replacement cost, not market value.
That is true but what I am saying is that the replacement value is severly inflated for are the house is located. But the company seems to paint all houses with the same brush as it were, as far as replacement costs per square foot are concerned.
When we closed on the house we were offered insurance on the house, not the mortgage from another company the bank used and it would have been about $400 a year, on our Met policy we pay about $1800 a year, our mortgage payments on that house are $1860 a year.
I have since tried other companies but they all say we have to insure both houses with them or the won't take us and when they here the other house is on Cape Cod they won't take us period. So until I sell the Cape house I seem to be rather stuck.
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