UW / Homeowners Insurance

Anonymous · ‎04-10-2015

I have a strange issue. I am refinancing from conventional to VA (or trying to....it is not final yet). I am in UW now (my scores are in the mid 600s). I have worked on rebuilding my credit over the past few years. I have had the appraisal....appraised for 5K over what I need. I had the WDI done....no destroying bugs. Yeah! Had some baddies over 14 months ago and I already wrote a LOE but the LO said she would hold it until they asked for it.....I have plenty in reserves. If I can do this I will cut my mortgage payment by over half (I had two mortgages with outrageous int rates and getting it now at 3.875.)

My question is......I went online to pay my homeowners insurance yesterday and it said no payment due. Third party would be paying insurance. Now I know that for the first year my insurance and property taxes would be included in my mortgage payment with a VA loan and after that first year I can seperate them. I have not gotten an actual approval yet so why would my insurance profile (Allstate) say that?

I haven't called and asked yet...swamped a work today and just didn't have time to get stuck on the phone inquiring about this.

Has anyone run into this before?

Thanks!

StartingOver10 · ‎04-10-2015

Do you have an escrow account (also called impound account) with your current lender/loan servicer? If so, they are the "third party" that is paying your HOI. You pay it to your servicer every month, 1/12th of the bill and when the next due date arrives the servicer deducts the premium from your escrow account.

Yes you paid 12 months up front - and you probably paid 2 months worth of insurance payments to start off the escrow account when you purchased your home. If you check your closing paperwork, there is a escrow schedule that shows when your HOI is paid (annually usually 60 days before it is due) and when your real estate taxes are paid.

Now if you don't have an escrow account with your lender/servicer, then I don't know why the HOI would show that it is being paid by a third party.

Anonymous · ‎04-10-2015

I understand, however, I have always paid my insurance. The only thing that was in escrow was for property taxes. I have paid Allstate directly for years. This has me confused. Sorry - I thought it had something to do with the new loan (refinance) that I am currently seeking.

frugalQ · ‎04-10-2015

Are you refi'ing with a different lender? Did you provide the lender with your ins agent name?

It could mean that your new lender is setting up escrow and including your HOI in it. And now that it's switching over, the payment will no longer come from you.

I would def get answers ASAP....you don't want to risk your HOI lapsing for lack of payment.

Anonymous · ‎04-11-2015

Yes Frugal - I am refinancing with a different lender. And I did tell my LO that I wanted to stay with my current insurance provider as I have been with them for over 25 years. I was wondering the same thing but was shocked because I am still in UW and have not been given the final approval yet.

Thanks!

StartingOver10 · ‎04-11-2015

@Anonymous wrote:
Yes Frugal - I am refinancing with a different lender. And I did tell my LO that I wanted to stay with my current insurance provider as I have been with them for over 25 years. I was wondering the same thing but was shocked because I am still in UW and have not been given the final approval yet.

Thanks!

It is very strange. The new lender would not make a payment for you until you have closed and most especially insurance because you pay the first year's premium up front. Sounds like an error within your insurance company. Call your agent like FugalQ suggests.

BTW, the reason they need your insurance info at the new lender for u/w is to make sure you have ins in place for closing in the right amount and with the right clauses to cover the lender + to check the payment amount. No way the lender would unilaterally pay your insurance premium prior to closing.

Anonymous · ‎04-11-2015

I don't really think they made a payment but when I went on line to make another insurance payment it said will be paid by third party next to Home Owner's. I was online to make auto insurance payment;.

Thanks for all the input!