Does paying off a home loan lower HOI premiums?

Question

So I own some rentals with traditional loans, leveraged somewhere between 50-75% LTV each. Every so often I toy with the idea of paying one or two off, starting with the higher interest loans. Anyone know if, besides making the mortgage go away, would that also impact the Home Owners Insurance payments? Are there any other benefits to having a paid off loan that are lesser known?

Tracy Streich · Answer

Makes no difference to the insurance company.   You can choose to insure it for less if you have it paid off.  Most have a minimum price per PSF

Bjorn Ahlblad · Answer

@James R. Copeland Paid off properties give me peace of mind; that's worth a lot!

John Mocker · Answer

James,

The only way it would impact your Insurance is if paying off the loans would increase your credit score.  Many Personal Insurance companies use certain info from your credit history to create an Insurance Score (each company has their own formula for calculating it).  Although it is not your actual credit score, it tracks with it.   If you are starting out with a good credit score, the improvement may not have much impact on your rate.

Does paying off a home loan lower HOI premiums?

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