Purchasing a property is an exciting journey marked by many important steps. One of the most important is securing insurance on the property you hope to purchase through a mortgage agreement.
Your mortgage company lends you the money needed to purchase the property, and they are listed as the loss payee on your policy so that the insurance company pays the mortgage company if something catastrophic happens to your property. For convenience and security, homeowner’s insurance payments can be included in your monthly mortgage payment.
Since the property is usually the collateral for the lender, the lender will often require you to maintain insurance and make regular payments toward it, usually through adding this payment amount to your monthly mortgage payment so that you don’t forget to make a payment.
Escrow accounts are the typical method used to collect homeowner’s insurance payments. Most buyers pay the first full year’s premium when the escrow account is created, and the next 12 months collect monthly payments to build towards the next year’s premium amount.
Insurance coverage may go up or down at different times, and if there is a change in coverage that affects the insurance premiums, you may end up with a shortage or surplus in your escrow account. A surplus can usually be applied to future payments, while a shortage can also be spread out over future payments while the monthly payment amount is adjusted to compensate for the shortfall.
When you’re ready to switch your homeowner’s insurance, give us a call! We’ve been helping clients save money and protect their homes for decades. Our team can make the insuring process smooth and painless so that you can live worry-free. To reach us by phone, call (715) 754-5254 or (920) 822-3695. You can also email us at insurance@premiercommunity.com or visit www.yourpremierinsurance.com to learn more.