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Things to do with homeowners insurance when refinancing your mortgage?

NOW  is a great time to refinance your mortgage!

Refinancing Mortgage and it's affect on your homowners insuranceWe are hearing everywhere that now is a great time to be refinancing your mortgage..

Are you refinancing your mortgage? If so, don’t forget to contact your insurance agent regarding your homeowners insurance.

We are seeing a lot of refinancing going on right now.  In today’s favorable interest rate environment, it can make sense to get a lower monthly payment or to get some cash out of your home’s equity.

What information would you need to provide your insurance agent for a refinance?

  1. Mortgagee Clause – This is the name and address that they want to see on the declarations page. It is also the address that your home insurance company will send the annual invoice if you are having your premiums set up in escrow.  They need to have this information show on your declarations page.
  2. Closing Date – The date of your closing will be the effective date of the change on your policy to remove the old lender and to add the new lender. So as soon as you have a date set, give your agent a call.  And if this date changes for any reason in the process, remember to call your agent to give them the new date.

Your lender may tell you not to worry and to let them take care of notifying your insurance company to get things straight.

We advise that as soon as you have a settlement date, you contact your insurance agent and give them the appropriate information to add your new lender.

There are a couple if issues that can arise by letting your new mortgage company do this:

  1. Timing – Sometimes the lender will get the information over late in the process, causing unnecessary stress for the refinance process.
  2. Verification – The insurance agent or company will need verification from you in order to make the change to your insurance policy. The best and easiest way is for you to give your agent a call with the lender information.  Otherwise, the lender will have to send a signed authorization form into your agent in order to process the change.
  3. Steering – Most lenders and loan officers are great. But occasionally you will run into a lender or loan officer who wants to cause issues with the insurance process of a refinance so they can send you to their go to agent or company to write a new policy.  Sometimes they will cut your coverages to make the premiums lower to make it look like they can save you more on your monthly payments to them  This is VERY rare, but we have seen it happen.  So it is a great idea to get your homeowners insurance agent involved early on so they can be there throughout the process for you.

So, for your peace of mind and for a smoother refinance transaction, please reach out to your insurance agent with the new lender information as soon as you commit to the refinancing of your mortgage.

If you have any questions on the insurance aspect of a refinance, please give us a call at 410-647-1111.

Are you thinking about refinancing your mortgage but do not have a bank or lender to deal with?

If want to refinance, and are not already working with a lender, we can help.

We know several very reputable mortgage lenders in Maryland and would be happy have one of them reach out to you to discuss your refinancing needs.

Simply fill out the request form and we will have someone reach out to you.

 

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