How does your Homeowner’s Insurance effect your Short Sale? Do you have to continue to pay on it?
In this hard pressed economy, people now more than ever are
turning to Short Sale solutions as a way of getting out from under the
pressures of sky rocketing mortgage costs as well as plummeting market
values. A short sale is your best bet in attempting to save your credit
and a start to rebuilding your finances. 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, now more than ever lenders are taking aggressive and proactive
measures in dealing with their properties that are in a deficient
status due to the huge losses from neglect and destruction of
properties. 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.
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.
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!