Is Home Insurance Less Expensive after Paying Off Your Mortgage?

Living without worrying about paying for a mortgage is a major milestone. Whether you’ve just sent off the last house payment or saved up enough money to pay in cash, this achievement comes with many rewards. On top of being able to put your mortgage payment toward other needs, you may also find a few more perks that could impact the cost of house insurance. Knowing when you can expect to see insurance rates decrease helps you maximize the financial rewards of homeownership.

Expect to Drop Private Mortgage Insurance

Many people get private mortgage insurance confused with property protection. Most lenders require borrowers to purchase private mortgage insurance when they put down less than 20 percent of the home’s cost as a down payment. Depending on your credit history and other factors, you might still be required to pay PMI with a larger down payment. 

This type of insurance covers the lender. If you’re unable to pay the mortgage for any reason, the PMI will kick in and prevent the lender from facing a loss. Once you’ve paid off your mortgage, this requirement goes away. 

Understand How Homeowners Insurance Differs

Homeowners insurance is a general property protection policy that covers damage to a home along with certain personal injuries and other covered liabilities. Since you’ll own your home, it’s important to maintain this insurance coverage. Paying off your mortgage doesn’t prevent burglaries, house fires, and other known perils. Therefore, you can expect to continue to pay for this essential form of insurance, although you won’t have to furnish proof of coverage to lenders anymore if they required it in the past.

Know Which Factors Impact House Insurance Rates

Home insurance rates rise and fall over time, and you might still notice slight increases after you pay off your mortgage. This is usually due to a house aging. Older homes tend to have slightly higher rates than new ones due to the potential for issues such as aging plumbing pipes breaking or roofs leaking. You can keep this part of your insurance rates lower by doing proper maintenance on your home. Letting your insurance company know when you’ve had a roof replacement or inspection done could help you save on the monthly premiums.

Consider Increasing Your Property’s Coverage

Now that you aren’t paying for a mortgage, you might have more funds to put toward protecting your property. For instance, some homeowners increase their insurance coverage to ensure they have the best financial support to overcome a major catastrophe. Or you might choose to purchase add-on policies that cover special circumstances. Many homeowners like to add coverage for potential issues that could arise, such as problems with a swimming pool or special kinds of equipment. Having full coverage for your home gives you peace of mind as the sole owner of the property. 

For information on choosing affordable homeowners insurance that suits your needs, call on the experienced agents at Altra Insurance Services. In addition to homeowners coverage, we offer a variety of reliable insurance products, including business, renters, and car insurance Chula Vista. Call us today to learn more about our high-quality service and affordable coverage.