Buying a Home in 2024? Check Up on This Important Factor Before Making an Offer

If you're looking to buy a home, there are certain requirements you'll need to meet to get a mortgage. You'll need proof of income and, if applicable, a down payment.

You're also required to put homeowners insurance in place in order to get a mortgage. But even if you're planning to somehow pay for a home in cash, homeowners coverage is the sort of thing you should aim to have regardless, even if it's not a requirement.

Without homeowners insurance, you could conceivably end up in a situation where you have to pay out of pocket to rebuild your home in the event that it gets destroyed. And even in a less-extreme scenario, you might have to shell out many thousands of dollars to cover the cost of damage in the absence of insurance.

But in some parts of the country, homeowners insurance is becoming harder to get. So before you make an offer on a home, make sure you'll be able to actually obtain homeowners coverage.

Climate change is forcing insurers out

Although climate change is impacting the whole country, there are certain states that have been more susceptible to property damage in recent years as a result of it. And as such, homeowners insurance companies are increasingly pulling out of high-risk areas like Florida, where storm-related damage and flooding has been prevalent, and California, where wildfire damage has been a major issue.

Last year, State Farm announced that it would stop accepting new homeowners applications in California effective May 27, 2023. And Farmers Insurance announced last year that it would stop offering its policies in Florida.

These are just a couple examples. The point, however, is that homeowners insurance is getting harder to come by in parts of the country. And even if insurers aren't pulling out of markets completely, they may be raising their premium rates to an unaffordable degree to account for their higher risk and costs. That's something you'll need to look into before buying a home.

Shopping around for options is always a good idea

To be clear, just because you're buying a home in a state like California or Florida doesn't mean you won't be able to get insurance. But in certain areas, your choices may be limited. And you may have limited options in other high-risk states or areas, too. The point, therefore, is to shop around for insurance before committing to a home purchase to see what options you have.

Even if you're not buying a home in a high-risk area, it's still a good idea to do some research and see what homeowners insurance expenses you're looking at. That might help you determine whether a home you're looking to make an offer on is as affordable for you as you think.

You may, for example, be calculating your ongoing housing costs under the assumption that you'll pay $100 a month for homeowners insurance. If you contact insurers and realize you'll need to spend double that amount, that throws your numbers off. But it's better to find that out before you buy. Doing the research beforehand will help ensure you don't get thrown for a loop when it comes time to sign on the dotted line for your new home.