FAQ #3 ........... Homeowners Insurance

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

This will be my third FAQ blog in the ActiveRain contest that Anna 'Banana' Kruchten established in which we are to respond to the 10 most frequently asked questions that we are asked, and we are to do this in 10 different blogs.  My last blog was titled "FAQ #2 ...... What Do You Mean I Need Money For Closing Costs?"  While writing that blog I realized that their is a question that I get on almost every loan that is related to one of the Closing Costs, Homewoners Insurance.

FAQ #3 ......... Why Do I have To Pay For A Full Year Of Homeowners Insurance Up Font When I Am Paying For It Every Month In My Mortgage Payment?

This is one of the shortest explanations that I give, but a very important and confusing one for especially First Time Homebuyers.  It is also an explanation that I usually end up giving again after the loan is approved, and I instruct the Borrower that they now need to go and get Homeowners Insurance, and that the insurance company is going to ask them for the first year's premium up front. 

Homewoners Insurance like any other insurance is paid in advance.  Therefore, at the Closing there isn't any money in the escrow account to pay the first year's premium.  A year from the Closing enough money will have been collect through each monthly payment to pay for the second year's premium, as well as every year thereafter, but the initial annual payment will have to be paid on or before the Closing.

As simple as that may seem, it tends to be a major source of confusion for First Time Homebuyers, and even Homebuyers that have been through the home buying process several times.  I would have expected the confusion to be why they need to pay taxes on a house that they have not even lived in yet, but that question oddly is rarely asked.  But I can count on giving the simple explanation above at least at the beginning of the loan process, and at the time they are instructed to obtain Homeowners Insurance, and some times even a third time when they receive the HUD-1 just before the Closing.


Previous FAQ's Blogs.

"What Do I Need To Do To Get Pre-Qualified For A Mortgage?"

"What Do You Mean I Need Money For Closing Costs?"



  Info about the author:

 George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net


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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

George, this is another question that i go over with buyers up front because it is so confusing to the buyer...it is the way it is and it is not changing!

May 18, 2012 11:12 AM #1
Mark Loewenberg
KW of the Palm Beaches - Palm Beach Gardens, FL
KW 561-214-0370

great answer and yes we have the same conversation down here in FL where we get boxed in by hurricanes adding yet another interesting aspect of why insurance is just a really good idea!

May 18, 2012 12:12 PM #2
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource
George, when things are explained as you have done, buyers get it...keep it simple...great explanation.
May 18, 2012 01:30 PM #3
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Yes, you are correct. I know this is something you go over when you are prequalifing, as I do. I do interact with clients that have been prequalified previously and when I bring it up, they didn't have a clue.

May 18, 2012 08:00 PM #4
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

George - I love your explanations.  You are so concise, straightforward, and consumer-friendly in the way you write.  You really should put these FAQ's on your website, when you are finished with the contest.

May 18, 2012 11:40 PM #5
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