As a loan officer, I am often surprised when a “hardliner” who seems to think that the difference between 4.75% and 4.875% on an FHA loan is a matter of life and death overlooks one of the simplest ways to save money on his monthly mortgage payment.
And when I point it out to them, it seems that more often than not, they go out, do exactly what I advised them to do and end up saving hundreds of dollars each year on their monthly mortgage payment.
What do I advise them to do?
Shop their homeowners insurance policy to multiple homeowners insurance companies.
When shopping for a mortgage, after we cover the usual “here is your interest rate, here are the total fees…” discussion, we almost always then talk about their total monthly payment which is currently usually at the very bottom right of the Good Faith Estimate.
When I point out that the interest rate and fees make up the Principal and Interest portion of their mortgage, but that they also have mortgage insurance (sometimes), property taxes and hazard insurance (almost always, assuming they have an escrow account) I then give them this simple piece of advice:
“Find a insurance quoting site and spend a few minutes shopping for the best coverage and cheap insurance that you can find”
And I have yet to see someone come back who didn’t take this advice and end up saving at least a little bit of money on their monthly homeowners insurance.
Which makes my life just a little bit easier – because they end up saving money on their monthly payment and still getting a great deal on their mortgage.
{ 1 comment… read it below or add one }
Sure. Shop online where you can save time and effort but be careful. When it comes to insuring the single largest investment you’re likely to ever make, a few bucks cheaper isn’t always smarter or better.
It’s easy to quote a lower rate by playing with coverages and limits that the average consumer might not understand. Does this leave you – the buyer – badly under insured? That’s the risk. Don’t take it. Instead, shop online then consult a local agent. For details see http://florida-insurance.net/?p=94