I am an agent who is near the California San Bruno Fire today helping a client move her belongs. Click here to see news report: http://ac360.blogs.cnn.com/2010/09/10/huge-california-gas-fire-75-percent-contained/
She asked me two questions:
•· Do you have to continue to pay your Homeowner's Insurance during a Short Sale?
•· Does your Homeowner's Insurance affect your Short Sale?
One of the first things that homeowners tend to let go of in a foreclosure situation is their home owners insurance. This is the BIGGEST mistake you as the homeowner can do!! For many lenders, a notice of cancellation of Insurance will result in the ceasing of the Short Sale process; in addition some lenders are now, "Rekeying" properties. This is becoming a very costly problem for lenders due to the astronomical losses they are taking on damaged properties and you can expect harsher measures to come in the future. So with that being said what can you as a homeowner do to assure that your Insurance stays active and your premiums are reasonable? There are two main drivers in determining premium on an Insurance Policy, Coverage Amounts and Deductibles.
Coverage's
Your Homeowner's Insurance policy is split up into several different areas, the biggest driver in your premiums is the Dwelling coverage, now I could dive into all of the factors and Insurance jargon but would probably make most of you fall asleep reading this blog. The greatest thing that you as a homeowner can do is to work with an agent that will take the time to work with you, explain the coverage's available to you and how they affect you as well as tailor the policy to fit your needs.
Deductibles
This is another key area in your Insurance coverage and also another huge driver in your Insurance rates. The higher deductible that you carry the lower your rates will be. Now in most cases I recommend my clients carry a deductible of around 1000, however in the case of a "Hardship" I would suggest raising a deductible up to 2500 - 5000 to assure that your rates are reasonable enough for you to maintain coverage throughout the process.
I hope that this post sheds a little light on the severe importance of assuring that your policy stays in force while you are in ownership of your home. It is detrimentally important for you as the home owner to stay proactive in the Short sale process, it is very easy for people just to throw up their hands and hope for the best however for your Short Sale to be truly successful you must remain in the game!
Clearly, you recognize now that you need to have an agent that knows this stuff. Beware of others who say they are a Short Sale Expert. Expertise is earned ...not learned. I have all the class room time you can get and designations galore and nothing is better than experience. I have earned these scars & bruises.
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