How Refinancing Your Home Could Affect Your Premium
Home upgrades don’t just happen between the walls. They can happen between the lines as well. Refinancing your home could be a strategic move if you can upgrade your mortgage when interest rates are low.
“Refinancing a mortgage can reduce monthly payments, shorten the timeline on the mortgage, and help a homeowner build equity at a quicker rate,” says Amanda Robins, a Realtor in Longview.
“However, if a homeowner has made improvements or renovations that make their home worth more, it could impact the amount of insurance they must carry, thus possibly raising their insurance rates.”
Anytime a mortgage is refinanced, the bank or lender is required to reassess the home’s value. Any changes in the value, whether higher or lower, could directly impact the rate at which your insurance is based.
Would Refinancing Save You Money?
A 2017 Black Knight Financial Services report found that, with the recent declines in mortgage rates, roughly 4.4 million borrowers could save an average of $260 per month by refinancing their home.
Refinancing your home could:
- Lower the interest rate on your existing loan.
- Save you money by decreasing the amount of monthly payments.
- Secure a fixed interest rate.
- Change the terms or length of the loan.
- Save on interest and help you pay off the home sooner.
Will It Impact Your Insurance?
Andy Crenshaw, a Texas Farm Bureau Insurance Agent in Lewisville, says refinancing in and of itself does not usually affect his clients’ home insurance premiums. “However, refinancing is a good time to reevaluate your home insurance to make sure you have adequate coverage and limits that suit your needs.”
If your home’s value does indeed need reassessment, your Texas Farm Bureau Insurance Agent can help you determine whether you have the right coverage to accommodate that.
Crenshaw recommends discussing your options first with a licensed mortgage lender to decide if the process will be worth it for you and your family, and then following up with your Texas Farm Bureau Insurance Agent to ensure you’re getting the best advice for this major financial decision.
“You should be careful taking insurance advice from a mortgage lender just like you should be careful getting lending advice from me,” Crenshaw laughs. “I believe that trust is the most important factor, so find someone that you trust and lean on them for advice in the areas they are qualified in.”
Trust and teamwork are part of Texas Farm Bureau Insurance’s DNA. Have questions? Call your local Texas Farm Bureau Insurance Agent to start getting some honest answers to your insurance questions.
Coverage and discounts are subject to qualifications and policy terms and may vary by situation. © 2018 Texas Farm Bureau Insurance
