The Impact of Insurance Costs on Real Estate Deals

Homeowner’s Insurance and DTI Calculations

As you guide your clients in the home buying process, it’s essential to be aware of how insurance costs can affect their financials. Homeowners insurance often plays a crucial role in the debt-to-income (DTI) calculations that lenders use when assessing loan applications.

Understanding DTI

When a buyer applies for a mortgage, lenders calculate their DTI based on expected monthly expenses, including principal, interest, property taxes, and homeowners insurance.

Here’s the kicker: If insurance premiums are underestimated early on, the real costs can come as a rude awakening. Higher-than-expected insurance can raise a buyer’s monthly payment, which may push them over DTI limits, leading to delays in approvals or even loan denials.

Key Takeaway

Accurate insurance estimates from the outset ensure your clients have realistic financial projections, streamlined approvals, and, ultimately, fewer renegotiations late in the escrow process.

My agency offers transparent, realistic insurance costs to help your clients stay ahead in their transactions. Let’s work together to eliminate unnecessary hurdles!