Buying a Home? Don’t Overlook Insurance and Property Risk

When you're shopping for a home, it's easy to focus on the big numbers: the purchase price, down payment, mortgage rate, and estimated monthly payment.

But there's another number that can have a major impact on what that home actually costs you each month: insurance.

Recent housing research shows that a significant portion of homes across the country face elevated risks from events such as flooding, severe winds, hurricanes, and wildfires. And while a home in a higher-risk area may have an attractive purchase price, that risk can sometimes translate into significantly higher homeowners insurance or flood insurance costs.

For home buyers, that matters because your true housing payment is about much more than principal and interest.

A $400,000 Home Isn't Always a $400,000 Home

Two homes with the exact same purchase price and mortgage rate can have very different monthly payments.

Your total housing expense can include:

• Principal and interest

• Property taxes

• Homeowners insurance

• Flood insurance, when required or recommended

• HOA fees, if applicable

• Mortgage insurance, depending on the loan

Insurance is one of the expenses buyers sometimes underestimate until they're already well into the home-buying process.

That's why I encourage buyers to look beyond the listing price when comparing properties.

Insurance Can Affect Mortgage Qualification, Too

Higher insurance costs don't just affect your budget after closing. They can potentially affect how much home you qualify to purchase.

Mortgage lenders generally include required homeowners insurance, property taxes, and certain other housing expenses when calculating your total monthly housing payment and debt-to-income ratio.

If you budgeted for a certain payment but discover that insurance on the property costs hundreds of dollars more per month than anticipated, your qualifying numbers can change.

That's something I'd much rather identify before you make an offer than after you've fallen in love with the house.

This Is Especially Important in New Jersey

Here in New Jersey, buyers should pay particular attention to flood and wind exposure, especially when considering properties near the coast, rivers, bays, and other areas susceptible to flooding.

And being outside a FEMA-designated high-risk flood zone doesn't necessarily mean a property has zero flood risk.

The goal isn't to scare buyers away from a particular home or neighborhood. It's to understand what you're buying and what it will actually cost to own.

Get the Numbers Before You Make the Decision

Buying a home shouldn't be based solely on the asking price—or even solely on the mortgage rate.

Before making an offer, let's look at the complete financial picture.

At Mortgage Mike, I can help you understand your estimated mortgage payment, taxes, insurance considerations, cash needed to close, and overall financing options so you can compare homes based on what they'll actually cost you.

Thinking about buying a home in New Jersey or Pennsylvania?

Let's run the numbers before you start making offers.

Michael DeSanto | Mortgage MikeNMLS #1766709CrossCountry Mortgagewww.newhomeapproval.com