This is becoming nearly impossible.
Our home was built in 1780, and many insurance companies don’t even cover homes that old. One condition for our loan to be fully approved is finding insurance that costs no more than $800 annually. This is due to our debt-to-income ratio, apparently. Does anyone have any tips on how to find insurance that’s affordable for such an old house?
We can actually afford the house, but my husband’s credit score is just a few points under 620, so he can’t be on the mortgage. It’s strange because this house would actually save us $1,000 per month compared to what we’re paying now!
@Kingsley
The issue isn’t that they can’t afford insurance; it’s that the lender requires insurance to be under $800 to meet their ratios. The actual cost won’t be a problem for the person who posted this.
@Kingsley
What GXI meant was, ‘you might find insurance for $800, but it’ll go up later.’ The person who posted this only needs it to be $800 to get the loan approved. The loan won’t get canceled if it later increases to $1,700.
Her husband makes enough money, but his credit is bad, so they’re trying to do the loan without him. The issue is with the lender, not affordability.
@Kingsley
Thanks for the advice. The problem is my husband’s credit score being too low to qualify. We can afford the house, but on paper, the numbers don’t look good to the underwriters.
Teo said: @Kingsley
Thanks for the advice. The problem is my husband’s credit score being too low to qualify. We can afford the house, but on paper, the numbers don’t look good to the underwriters.
You could get the cheapest insurance policy just to close the loan, then switch to the one you really want after. Also, maybe ask if your husband can do a rapid score improvement—it could help!
Teo said: @Kingsley
Thanks for the advice. The problem is my husband’s credit score being too low to qualify. We can afford the house, but on paper, the numbers don’t look good to the underwriters.
Have you tried looking at different lenders? Some might be more flexible about credit scores and ratios.
Teo said: @Kingsley
Thanks for the advice. The problem is my husband’s credit score being too low to qualify. We can afford the house, but on paper, the numbers don’t look good to the underwriters.
If his credit is just a few points off, maybe you can raise it quickly. Credit Karma and similar services can show you how to boost it by 20-30 points. That could solve your problem!
This happens a lot. Getting insurance for $800 will be hard. Try asking for the highest deductibles and cutting down on things like personal property coverage or loss of use. Your insurance agent can submit the necessary proof at $800, then you can add the extra coverages later. Once the loan is sold, update the escrow to reflect the actual insurance cost.
You could lower the loan amount by putting down more upfront or buying points to reduce the monthly payment. Either option could free up money for insurance. Once your husband’s credit improves, you could refinance and get some of that cash back.
Can your husband raise his credit score and then get added to the loan? A few points might make a big difference. The mortgage rates are dropping too, so that could help with the insurance situation.
You should probably consider another house. Is 1780 really the right year? A home that old will have ongoing expenses, and if you’re struggling to get a loan with such cheap insurance, it might be better to look elsewhere.
@Reece
Yeah, 1780 is correct. The electrical and plumbing were updated in the 90s, and we got a new roof in the last 5 years. It’s just that the numbers don’t look good on paper, but we can afford it.
Teo said: @Reece
Yeah, 1780 is correct. The electrical and plumbing were updated in the 90s, and we got a new roof in the last 5 years. It’s just that the numbers don’t look good on paper, but we can afford it.
Those updates help, but with a house that old, you’ll face other issues like structural integrity and insulation. Finding insurance for $800 a year isn’t going to happen unless the replacement value is very low, which I doubt.