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Tips for young adults to save on home insurance

June 25, 2014

As more students leave college with massive student loan debts, finding ways to cut costs is more important than ever—especially for those looking to purchase a home.

Michael Corbett, a real estate expert with Trulia, told Fox Business that young adults interested in purchasing a home would be wise to consider several items before applying for a home loan.

Renovated or new homes often are cheaper to insure.
"[Owning a home] is really about deferred gratification,” Corbett said. “You know where the market's going—you need money, a job history, and you need to show your debt is low compared to your income.”

Experts are urging millennials to create a financial plan to see what they might be able to afford. Owning a home is not just the cost of doling out cash for a monthly mortgage payment. Young adults must realize they will be forced to pay property taxes, maintenance fees and insurance costs.

“Just because you can get a loan does not mean it's the best thing,” Karen Goodfriend, certified public accountant and principal at KK Wealth Advisors, told Fox Business. “What's really important to you and what things are you really willing to do to save?"

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Saving on insurance for a first home

While there are avenues a first-time buyer can take in order to land a cheaper mortgage rate—such as having a good credit score or a nest egg to make a large down payment—there are also ways homeowners can save on home insurance.

“Mitigating loss is a big part of who we are and what we do,” Sean Meehan, second vice president of property strategy and design for Travelers Insurance of Hartford, Connecticut, told Bankrate. “Yes, we pay claims. But at the same time, we want to help prevent claims, which lowers premiums in the long term.”

Madelyn Flannagan, vice president of agent development, education and research for the Independent Insurance Agents & Brokers of America, told Bankrate that insurers give discounts to encourage homeowners to be more careful and have better recognition surrounding the homes that they are insuring.

Insurance saving tips One way a potential homebuyer can save on insurance is if they purchase a home in a gated community. Most insurers will offer a discount for properties within a gated community because they are less likely to fall victim to vandalism or burglary.

“That definitely falls under loss mitigation,” Meehan said. “If you live in a gated community, it's a lot less attractive to a thief than a place that doesn't have that security.”

New homes or recently renovated homes are often cheaper to insure, according to Bankrate?. This is because they are often safer, with newer wiring, stronger roofs and pipes that don't leak.

Meehan said the inspection process for loss mitigation is typically done at the time of purchase of a home, which gives insurers a better grasp of the home and any potential strengths or weaknesses.