How much is mortgage ins premium for a 76-year-old woman

UPDATED: Apr 6, 2015

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Asked April 6, 2015

1 Answer

There are several variables to consider in regards to calculating any potential premium. The home value, credit score and past claims history are integral parts of any insurance premium. The age of the customer isn't nearly as critical to the insurance company as is the age of the actual home.

House Dimensions and Value
The most important attribute of a mortgage premium calculation is the actual dwelling value. An insurance agent will do a fact finding mission to figure out the total square feet of the house, the foundation type and the exterior structure. Roof age, house age and other materials used to build the home will also come into the total value of the home. The insurance mortgage premium is usually created based on what is called the replacement cost of the home. In other words, it's the cost to completely rebuild a home in the event of a total loss. Many customers get this confused with the actual home value or what a home would sell for in the current market. The replacement cost would pay for the tear down, debris removal, labor and new materials for the home in the event of that total loss. Therefore, the replacement cost is substantially higher than the actual value of the home or what the consumer would list it for when selling. The mortgage insurance premium is heavily based on the replacement cost.

Credit Rating
The majority of insurance companies utilize a credit ranking to come up with a score to help determine the overall mortgage premium cost. A credit score, for instance, is typically only one part of that score. Other factors may consist of debt to income ratio, how timely that individual pays his or her bills and any past due accounts. This overall score usually gives the insurance company a multiplier they can utilize to come up with the final number. The multiplier would be used against the replacement cost to provide that figure. Insurance companies do believe there is a correlation between this credit ranking and the possibility of turning in a possible claim. Many 76 year old women have good or excellent credit and low debt to income ratio. This is because many people at age 76 have already paid off their home loan.

Past Claims
Regardless of age, an insurance company may charge more for a customer who has turned in home claims in the past several years. Typically claims from mother nature(weather related claims) do not count against the customer unless they are in high volume and represent a certain trend. In some cases, an insurance company may not provide coverage for a customer with too many claims. If a customer has no claims, an insurance company will rate accordingly and the consumer generally gets the best price. Some insurance companies go back 5 years in claims history while others look back 3 years. The underwriting rules are different per company so it's important for the consumer to ask questions if they do have a history of claims.

Possible Discounts
Many insurance companies offer a multiline discount to customers who combine their auto and home policies together. These insurance companies can offer discounts on both the home and auto. There are also possible discounts for paying a year in full with various companies. Depending on the company, the customer may get a claims free discount as well if they are eligible. Some insurance companies might have discounts for clients in a particular age bracket. It's important to ask questions about which discounts a customer may or may not be eligible for. Discounts could range from 5% to 20% or more.

For a 76 year old woman, price may be the ultimate deal breaker. What's important to note is that deductibles vary from company to company. A deductible is the amount the consumer will pay before the insurance company assumes the rest of the cost of the claim. If a company has a $500 deductible, the customer will pay $500 out of pocket before the insurance company pays the remaining portion of any claim. Some companies are going to a percentage deductible. For instance, if a company has a 10% deductible on your replacement cost of your home then the consumer will pay 10% of the replacement cost before the insurance company assumes the rest. This is important to note because a replacement cost home valued at $200k would then have a $2000 deductible. So the consumer might not be getting the value they expect with a percentage deductible instead of a set $500 or $1k limit. In other words, the consumer should read the fine print and determine if the actual cost of insurance outweighs the potential deductible they would be forced to meet in the event of a total loss. For example, if wind damage cause $2500 of damage with the above mentioned 10% deductible then the customer wouldn't really be able to file a claim.

It's important that consumers read the fine print to determine just how much they are actually saving when trying to get a lower insurance mortgage premium. It's imperative to understand what the deductible is and to make sure that the home to be insured is never under insured.

Answered April 15, 2015 by Anonymous

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