But before you relax, there’s just one more item to check off. Don’t forget to let your insurance agent know about about your refinancing, so your homeowners policy can be updated with the new information, and your new mortgage company can be billed at renewal time.
“Doesn’t my mortgage broker give the insurance company this information when the refinancing is complete?”
Despite best intentions, this doesn’t always happen. And this sometimes causes problems when your homeowners insurance company, if unaware of the change, sends the homeowners policy renewal invoice to your FORMER mortgage company. They don’t pay it, because they don’t hold your mortgage anymore. So, with the invoice unpaid, your insurance company begins to take legal steps (including legal notice to you) to eventually cancel the policy for non-payment. This causes you the unnecessary headaches of having to quickly provide the new mortgage company information to your insurance company, along with the payment, before you can have the policy reinstated.
You can avoid these hassles by simply making certain that your mortgage broker does communicate your new mortgage company information to your insurance agent, then following-up to make sure your agent has what he or she needs. The specific informational items an insurance company needs about your new mortgage are:
“Mortgagee Clause”: This is the legal way the mortgage company requires its name and address to be listed on your homeowners policy. It’s not simply the mortgage company name and its customer service mailing address. The mortgagee clause usually consists of a slightly different wording of the mortgage company’s name, a different address, plus some specific legal language.
“Loan Number”: Also known as your account number, the loan number is crucial for an insurance company to have because mortgage companies use loan numbers to find its customers (you) in their databases. A mortgage company also requires the loan number when an insurance company sends them an invoice requesting a homeowners policy renewal payment.
“Escrowed” or “Not Escrowed”: Determined when you first take out or refinance a mortgage. Means whether you want your mortgage company to collect enough money from your mortgage payment every month, in order to have enough money “in escrow” to pay the annual homeowners insurance policy premium. If you elect to “not escrow”, you’re electing to pay the insurance company directly, and not through your mortgage company.
“Effective Date”: The date your new mortgage is in effect.
I’m here to help if you have any questions about your insurance!
David Yates Insurance Agency
1881 General George Patton Dr, Suite 103
Franklin, TN 37067
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