November 19, 2016
Why escrowing your taxes and insurance hurts you
Do you have an escrow account on your mortgage? Each month you are contributing an amount over and above the principal and interest payments to cover your taxes and insurance and each year your lender has to provide you with an escrow statement – basically an update on how much money you have in escrow and how much money they project you’ll need to pay those taxes and your annual homeowner’s insurance bill.
Most years your payment will change as your taxes adjust (yes, usually upwards) but also, your insurance can too and this is where insurance companies hit you with a rate increase on the sly. After all, your payment goes up “just $40 a month”. Maybe that’s because your insurance just went up $480 a year!
Some years ago the insurance on my personal home went from under $900 to over $1,600 over a 2 year period. Of course my payment only went up by about $60 over that 2 year period but when I shopped for homeowners insurance it came right back down.
There are some serious myths out there regarding homeowners insurance and escrow accounts. Did you know that you can switch homeowners insurance providers at any time? Did you know that the insurance company returns unused premiums to YOU (not to your escrow account holder)?
Switching insurance companies is a breeze even if you have an escrow account – my recommendation is to comparison shop your homeowners insurance every year.
If you need a local insurance provider referral please let me know, I’m always ready to assist you with your Franklin Real estate needs – buying or selling I have over 14 years experience and a group of clients who consistently feel like I treated them as I would family. I can always be reached at 615 579-7909 via Facebook and of course Email.