Over the past couple of years we have seen home insurance rates increase. Your insurance payment will affect your mortgage payment and can cause it to increase each year. Most lenders require you to escrow for insurance and property taxes so as your insurance bill changes, so does your mortgage payment.
Home insurance rates have gone up in many states due to storm damage, rising property values and increased litigation. You may have had claims on your insurance and that can affect your own premiums. In Minnesota, we have seen rates increase on average the last few years and hopefully this year won’t be as bad. Insurance companies set rates based on how likely you are to file a claim. They consider past claims, your neighborhood and the condition of the house. In many cases in the past year, I have had clients that needed to send a home inspection to the insurance company. Or the company sent someone out to the home to look at things like the roof and exterior of the home. If the roof is too old, they may not be willing to cover replacement.
There are some things you can do to help lower your insurance costs. Raising your deductible can help lower your premium. Make sure you can cover the deductible if you have a claim though! Improve your home security with security systems, deadbolts and smoke detectors. Bundle your policies – combine your home and auto to help lower premiums. New roofs, furnace and plumbing can also help lower your premiums.
Watch for your insurance notices and read them! Sometimes you will get a notice of an increase and it may help to call your insurance agent to talk about it. It may also be worth calling other insurance companies to get other quotes. Just make sure you are comparing the same coverages.
Once your mortgage company gets the notice of the new premium and any increase or decrease in property taxes, they will send you an escrow analysis to show how your payment will change. Typically you are given options to pay any shortage in one lump sum or spread it out over the year. If you change insurance companies, make sure your mortgage company knows you made the change.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
