If you are a new home buyer, congratulations! You understand exactly what it took to get into your new home; saving up for the down payment, reviewing your credit scores and cleaning up any inaccuracies, pre-qualifying for the loan, shopping for home insurance, and finding that perfect home. I have one piece of advice for you that will help you save hundreds, potentially thousands, of dollars in the coming years on the cost of your home insurance.
My advice is simply maintain and build on your good credit that got you into your home in the first place. In fact, this will also provide savings on your car insurance too. There are two reasons this is important. The first one is Texas home insurance is partly based on your credit, and it’s become an increasingly significant determining factor. People with good credit pay less, often much less than people with poor credit. In some cases, it’s about half of what a person with poor credit pays according to a recent Dallas Morning News article.
The second reason for maintaining good credit is it makes it easier for me as an independent insurance agent, to recommend alternative carriers when your home insurance increases in the next year or two. Home insurance rates have steadily increased among most of the major companies over the past 5 years. Some of this has been due to hail and wind claims, but there have been rate increases too. Rates will change and having good credit gives you many more options to choose from.
Maintaining and building on your current credit takes a little work and dedication. Monitor your credit by taking advantage of your free annual credit report at www.freeannualcreditreport.com. Check it annually, specifically reviewing it for errors that need to be corrected. Pay your mortgage and bills on time. I recommend automating this electronically using your bank’s bill pay option.
Keep your credit card balances low, preferably less than 30% of your available balance. Higher balances result in your score getting dinged. And as tempting as it may be to make your house the home you’ve dreamed of, avoid buying a bunch of furniture and home furnishings on credit. Wait for sales, shop resale stores, Craigslist, and garage sales to give your home that special charm you’ve wanted, and pay with cash. It may take a little longer, but you won’t have to be reminded of that purchase every month for the next year or two or three.
I’ve written home insurance for a numerous people in the Dallas / Fort Worth area. Those who maintained and built on their good credit, gave me the opportunity to move them to another carrier when their rates increased. Those who didn’t, had fewer options and ultimately paid more. What do you think? Share your comments, questions, and experiences with me on my Google +, Facebook and LinkedIn pages. I’d love to hear from you!