Money Sense Tips

Homeowners’ insurance is a must, no matter where you live. Insurance is valuable protection plan that will insure your house and belongings should a disaster occur. Not all natural disasters are covered, however, and you may find yourself on the short end of a losing battle if you are not fully covered by your insurance plan. Read on to find out what to look for when choosing a homeowners’ insurance policy.

Homeowners’ insurance is required by mortgage companies in order to insure you and the mortgage company against any loss. If you live in an area that is notorious for natural disasters, you may need to gain extra insurance in addition to your normal homeowners’ policy. Areas such as Florida, California or the mid-western states may not cover all natural disasters such as hurricanes, earthquakes, tornadoes and floods.

If you find that you live in a high-risk area, make sure you read the fine print of the homeowners’ policy. The best time to find out that you have no coverage is not after a disaster strikes. Unfortunately, that is how some people find out and then they have nothing to show for all of the destruction. So be sure to read the fine print and ask as many questions as you feel necessary in order to secure the best policy for your needs.


Some homeowners’ insurance companies may require that you secure additional insurance to insure against natural disasters that are frequent occurrences. For example, in Florida and other flat states, it is a good idea to secure additional insurance to guard against floods. Floods may not be covered under traditional hurricane insurance, so be sure to get the extra insurance if necessary.

A great way to keep your insurance coverage current is to take inventory each year of the assets in your house. As you gather more personal belongings and make expensive purchases, it is necessary to update your insurance to cover those items. Otherwise you will find that you are not insured for those items and it will cost you potentially thousands of dollars out of pocket to replace them.

Homeowners’ insurance is a necessity when you own a house. Insurance policies protect your house and its contents against most natural disasters. Some natural disasters, however, are not covered by your insurance policy so it is a good idea to read the fine print instead of finding out too late that you have no coverage. If you need to secure additional coverage, it is recommended that you do so, especially if you live in a high-risk area.

Many banks and financial advisors are trumpeting the benefits of refinancing your mortgage at a time when interest rates are fairly low. But there are some things to keep in mind which will make your pursuit of a better mortgage go smoother.

* Look at your current situation - Ask yourself why you want to refinance your mortgage. Is it because everyone says you should, or is it because you need to do so to drop your mortgage payments? Is your credit as good as or better than it was when you took out the first mortgage? A worse credit score could actually raise your interest rate. Is your house worth more than you owe? If so, then you may not be able to find a lender willing to take on that risk.

* Try your current mortgage holder first – If you have been a good customer, your current mortgage holder could be your best bet for obtaining a refinance. They may make you a better offer just to keep you as a customer. There also may be some advantages such as a reduction of fees.

* Investigate the interest rates – Shop around and find out what the best interest rate is that you can get with your current credit and income. Your rate may not be the one advertised by the lender and don’t forget the PMI, points, and other factors. It makes no sense to refinance your mortgage if you are going to end up paying more in the long run.

When you add up all the factors, if your new interest rate will be less than half a percent lower than your current one, then you are better off staying with what you have.


* Pay down your mortgage – If you owe more than your home is worth, you will probably not be able to refinance in a tight mortgage market. If possible, pay down your mortgage by several thousand dollars over the next few months before attempting to refinance. Your chances of refinancing, and of reducing or eliminating PMI, should be better afterwards.

* Wait it out - Even though everyone is touting the benefits of refinancing, you might find it’s not worthwhile to you. If you plan to sell in a year or so or if you can’t get a better deal, then just wait. Selling in a few years could net you more profit if you continue making your normal payments now. If you aren’t selling but have paid down more of your mortgage and improved your credit rating, you could get a lower interest rate even if overall rates have gone up.

Refinancing your mortgage can be frustrating, but keeping these tips in mind will help to smooth the process.