Since the housing crisis, the real estate market has made major improvements, but the generation commonly referred to as millennials just don't seem to be biting. However, all car owners know they need car insurance, and don't realize the benefit that being a homeowner could have on their insurance rates. Essentially, being a homeowner means you are typically a more reliable borrower, since you likely have a mortgage that you make monthly payments on.
"Homeownership does matter," Laura Adams from InsuranceQuotes.com told West Palm Beach NBC affiliate WPTV. "What that means is that the insurance company sees you as a little more responsible."
The homeowner discount
Many insurance providers offer discounts for homeowners because they are generally considered to be more trustworthy. There are many other factors that will also help determine your auto insurance rates, including driving record, credit score, type of vehicle and place of residence. Age is typically a big influencer in prices, and younger drivers are often subjected to higher insurance rates. For young homeowners, that spike could no longer apply, as the homeownership discount could counteract the risk of a young driver. Unfortunately, not all millennials are aware of how homeownership can positively impact other areas of life and many are unable to afford a home purchase as a result of rising real estate prices and tight lending restrictions.
In addition, homeowners can bundle their insurance policies for their vehicle and home into one lower rate, saving tons of money each month on premiums. In some cases, consumers can save up to 15 percent off their rate by bundling. Companies provide this incentive because they want to keep their customers under their roof. Bundling can also make it easier for policyholders to deal with their provider when they need to file a claim for either their home or vehicle.
Does buying a home improve your credit?
You may have heard through the grapevine that homeownership has several benefits, including the ability to improve your overall credit score. Your personal credit score is important for many different things, including other loans and your auto insurance rate, and most people want to improve their score for better terms and lower rates. There are several factors that determine your credit score, but the most important is typically your credit history, which makes up about 35 percent of your FICO score. This means that a more than a couple late payments on your credit history can seriously damage your score.
However, paying off a large debt - such as a mortgage - over time can show other lenders that you are a secure and trustworthy borrower. In that respect, your credit score will likely reflect this benefit of being a homeowner. Missing payments or defaulting on your loan can stick with you for a long time, which is why it is crucial to buy a home you can fully afford. Until you completely pay off your mortgage, which could take many years, you will need to ensure you make payments on time to benefit your credit score.