We often think mortgage brokers of as the go-to professionals for getting a home loan. But what about homeowners insurance? Can mortgage brokers sell homeowners insurance, and should you use their services for this type of coverage?
Let’s inspect what mortgage brokers can offer with homeowners insurance and whether it’s the right choice for you.
WHAT IS A MORTGAGE BROKER AND CAN THEY SELL HOMEOWNERS INSURANCE?
A mortgage broker is a professional who helps homebuyers find the best mortgage loan to suit their needs.
While most people think of mortgage brokers as being responsible only for finding and securing loans, some mortgage brokers with proper client documentation and licensing requirements may sell insurance products.
Mortgage brokers are an excellent resource for homebuyers. They have a lot of experience and knowledge regarding the mortgage process and can help you find the best loan for your needs. But what about insurance?
Should You Purchase Insurance From A Mortgage Broker?
The answer to this question depends on a few factors. If you’re comfortable working with a particular mortgage broker and feel they have your best interests in mind, purchasing insurance from them may be a good option. However, it is crucial to compare rates and coverage options before deciding.
There are a few things to keep in mind if you consider purchasing insurance from a mortgage broker.
- First, ensure the mortgage broker is licensed to sell insurance in your state. Not all mortgage brokers are licensed to sell insurance, so be sure to do your research beforehand.
- Second, check to see if the broker has complaints against them with the Better Business Bureau.
- And finally, get quotes from multiple insurers to compare rates and coverage options to make sure you’re getting the best deal. Remember that the lowest premium isn’t always the best option; read the policy carefully and ensure it meets your needs.
Even if a mortgage broker is licensed to sell insurance, that doesn’t mean they’re required to do so. Some mortgage brokers choose not to sell insurance products for various reasons. Some may feel that they don’t have the expertise needed to advise customers on which insurance product is right for them, while others may prefer not to deal with the added paperwork and hassle that selling insurance entails.
IS HOMEOWNERS INSURANCE REQUIRED ON ALL MORTGAGE LOANS?
Lenders typically require homeowners insurance to finance a home purchase. The rationale behind this requirement is that the lender has a financial interest in the property and wants to minimize the risk of loss or damage.
While it may seem like an added expense, homeowners insurance offers peace of mind in knowing your home is protected against unexpected disasters.
MORTGAGE INSURANCE VS. HOMEOWNERS INSURANCE
Mortgage insurance is a type of insurance that protects lenders against loss if a borrower defaults on their home loan.
Homeowners insurance is a type of property insurance that covers a private residence. The main types of coverage in a standard homeowners policy are dwelling and contents coverage, other structures coverage, and personal liability coverage. Some policies also include loss of use coverage, which reimburses the policyholder for the cost of living elsewhere while the home is being repaired.
Are Both Homeowners and Mortgage Insurance Required?
While both types of insurance are important, they serve different purposes and cover different risks. Lenders typically require homeowners insurance to get a mortgage, but mortgage insurance is not required.
However, borrowers who do not have a 20% down payment may be required to purchase mortgage insurance to get a loan. Mortgage insurance typically costs between 0.3% and 1.5% of the loan amount per year and can add hundreds or even thousands of dollars to the cost of your loan.
Conversely, homeowners insurance typically costs between $250 and $1,000 per year, depending on the state you live in, the value of your home, and the coverage you select. Since both types of insurance are essential, it’s crucial to understand the difference between them to make the best decision for your needs.
You can see that a mortgage broker and homeowners insurance goes hand in hand. Depending on licensing and proper disclosures, it may make sense to have the mortgage broker you’re using also find quotes for insurance; they already know exactly what you will need for your mortgage and what costs too much.
So can mortgage brokers sell homeowners insurance? Depending on several factors, some are able to offer quotes but it’s important to do your research first.
Compare quotes from multiple insurers before deciding – that’s the best way to make sure you’re getting the best deal possible.
If you need help finding the best homeowners insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.
