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When paying for home insurance on a new home before closing can I pay the years premium upfront with cash or do I have to have proof of where the funds came from?
I didn't "need" before closing, but it was understood that if I didn't buy on my own before closing then the condo association would have one waiting for me and then subsequently bill me.
When paying for home insurance on a new home before closing can I pay the years premium upfront with cash or do I have to have proof of where the funds came from?
Lenders will typically want a homeowners insurance policy paid in full at the time of close. You can either pay for it before close or some lenders will allow it to be put in your closings costs. They don't care where the money comes from to pay for the policy! Lenders are not going to close on a loan without their interest being insured.
When I bought my first home in 2000, a old house along the gulf coast in Florida I never thought much about insurance. When I tried to purchase a policy I was rejected by every company I applied. Closing was coming up and the real estate agent representing the property said he had it covered , no problem. We closed on schedule with insurance in place. Less than 3 months later nationwide cancelled , as I learned was state allowed. Thus my knowledge began on Florida insurance crisis which started after hurricane Andrew in 1992. It was a nightmare on my new but very old home purchase.
By 2003 we could only get a surplus line carrier not recognized by any state regulation and the coverage was not only awful but the premium was 3,500 k a yr. for a $125,000 small home.
Things got worse in 2004 after 4 hurricanes hit or threatened Florida and blamed for the insurance crisis, but in fact it started in 1992 after Andrew.
In 2005 the rates were $5,400 a yr and loss of the home was sure. State rules wouldn't allow joining the newly formed citizens pool due to the fact I was offered a private policy. So I didn't qualify for the state backed plan.
Luckily that changed in 2006 when my rates went up $7,600 a yr for a $128,000 home.
What I learned was the real estate mofo secured home owners so he could make his commission at closing, knowing damn well I would be cancelled within the grace period and in deep trouble on a old house that cost exceed what I could pay to make upgrades for code. I also learned if the state of Florida had not created a gov run insurance risk pool the state economy would have collapsed. Insurance companies cherry pick but when risk has to be paid out, they leave.
I am still living in this old home today, though I have bought 2 others since then . I am getting ready to sell this place. I don't know how to handle any questions about home owners to a new sucker buying in this vey expensive insured area over flowing with dated old home stock. There are no options of merit and the criminally allowed home owners scam rides high in 2017.
I am talking about wind mitigation, not even flood inurance and the greedy real estate goons that candy coat these cost to new buyers. My current rates are $1,650.00 a yr with 5% per wind event out of pocket, the house still valued about 130 k. Of my 3 properties the most expensive. Compare to my Dads home in Virginia valued at about 750 k and nearly 4,000 sq ft where he pays about $900 a yr.
I have no flood ins, not requied nor a claim in 17 yrs. Nor has Florida had any hurricanes in 12 yrs until last yr and they weren't major. Record profits for over a decade and when a hurricane does finally hit watch the greasy greedy POS insurance companies run.
Was wondering about that since it was listed as "Closing/Escrow Fee". Are there any upfront fees directly related to setting up an escrow?
It is customary in the secondary market (where loans are bought and sold) to charge 1/4 point for you to pay your own escrows (taxes and insurance). Some lenders (portfolio) will allow borrowers to pay insurance without the charge. Some lenders will waive the charge, but many can not.
One item to correct of what someone said, the first year you pay at closing. If you are making monthly payments that include taxes and insurance, what you are paying is not double payments. It may feel like that, but it's collecting the renewal to renew your policy in a year.
A word of caution - borrowers paying their own escrows need to be very careful and pay those bills immediately. If the lender does not have evidence of renewal by the anniversary date, they can and will obtain what is called a force-placed insurance policy, likely 3x the current premium. This can quickly put a borrower in arrears with their payment. In fact, that is how most find out about the forced policy, by getting past due notices.
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