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Step-by-step explanation on how to change home insurance with an escrow account

When buying a home, especially the first time, your lender will often require a mortgage account to be set up for your homeowners insurance and property taxes.

As long as you live with the same homeowners insurance, the lender will continue to receive an invoice upon renewal and will pay out of the escrow account. But what if you decide to change your homeowners insurance in the future? How does it work? And are you allowed to do that? To answer these questions, we need to start with the basics of homeowners insurance.

How Ohio Homeowners' Insurance Works

Standard home insurance is issued for a twelve-month period. As far as I know, there is no law (at least in Ohio) that says you MUST wait until that time has passed to get another homeowners insurance.

The home insurance is yours and as an insured you have the right to make a decision about that insurance, including terminating it at a certain date.

When your 1

2 months are over, the next twelve month period is called your renewal. Yes, many are waiting for renewal to change, but you do NOT have to. Want to discuss your Ohio homeowners insurance? Call or click today!

So I found different homeowners insurance – what happens to my latch when I switch?

There are two possible situations:

– Switch at your renewal

– Switch at a time other than renewal

Read on for a detailed explanation of how each one works together with super helpful advice to do switch simple.

Replacement of home insurance with deposit upon renewal
This is the simplest situation. But timing is still important. Most insurance companies send their bill to the mortgage company 30 days before the renewal. This means that if you want the change to go smoothly, you must change to your new insurance BEFORE the 30-day mark. This gives the insurance company time to process the application and send the bill to the lender.

Now it is really possible that your previous insurance company can send a bill earlier than 30 days before renewal and the lender ends up on two bills and pays one or both or none. The trigger for you to start calling the lender and your insurance agent is when you receive a cancellation notice for the new insurance. This means that it has NOT been paid. It is usually a fairly simple solution, but you must first notify the insurance company and your mortgage.
Change of home insurance with deposit at a time OTHER THAN RENEWAL

It is not as simple as the above example, but definitely feasible. This is where you need an insurance agent who wants to follow you through the process and offer solid advice (we do this often). Here is the typical procedure …
1. Existing policy is canceled.
2. Repayment checks are issued to you, the insured (they can NOT repay to the mortgage company because the insurance does not belong to them. They only pay the premium on your behalf).
3. You approve the repayment check and send it to the mortgage / lender.
4. The loan company is invoiced for the new premium.
5. The borrower pays new premiums from funds in custody.

Big assumption – you switch to take advantage of premium savings. So it would make sense that you have enough money in your escrow account (after you have deposited the refund check) for the bank to be able to cut a new check. If you do not, you need to make up the difference.

Some banks are really nice in that any extra premium will only be included in the annual "settlement" of the block. When this happens, they only add the amount to your new monthly payment.

Our hope is that, after reading this article, you will see that it is very feasible to change home insurance with deposit. Of course, having an insurance agent who will listen and help you through the process makes this process the easiest.

We work very hard to make the process easy – from start to finish, we offer advice, guidance and help complete paperwork to make the switch as simple as possible. Call or click today to discuss your homeowners insurance in Ohio.

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