If I’m Refinancing, Can I Switch My Homeowners Insurance?
** Yes, you absolutely can!**
Refinancing is a great time to take a fresh look at your homeowners insurance policy. Investigating your options helps you ensure you’re getting the right coverage for the best price.
When you’re refinancing your home mortgage loan, you’re replacing your existing mortgage with a new one. Your new mortgage will have differences from your old mortgage, including a different mortgage loan amount.
For example, your home may have increased or decreased in value since you bought it. Most likely, you will have already increased your home’s equity. (Equity is your home’s market value minus what you still owe for it. For more mortgage term definitions, check out our guide.) It’s also possible your new mortgage lender may have different coverage requirements than your old one.
In other words, your refinanced mortgage may mean that your homeowners insurance policy needs have changed. You don’t want more or less coverage than you genuinely need. And that’s why refinancing is a great time to shop around your homeowners insurance policy. That way, you can make sure that you’ve got the coverage you need at a price that makes sense for your budget.
Remember: Your homeowners insurance policy coverage should be sufficient to cover the cost to replace not only your home, but also its contents.
Ask your new mortgage lender about their homeowners insurance requirements, including the replacement cost they’ve used to determine your mortgage amount. Then, get to shopping! If you decide to cancel your old policy, there are a few things you’ll need to do, including providing your new homeowners policy information to your new mortgage lender.