Homeowner’s insurance is not required by law in the state of Maine. However, we recommend people wisely purchase homeowner’s insurance to protect one of the greatest assets they will ever possess, their home.
Also, most lenders require you to insure your home, and to list them on the policy as mortgagee. If you allow your insurance to lapse, you will receive a letter from your lender notifying you that they will obtain insurance on your behalf. “Force-placed” insurance, as it is called, is often more costly, and generally protects only the lender if your home is damaged with no coverage for your contents or personal liability.
This is why most lenders set up escrow accounts, a type of savings account designed to hold money used to pay for homeowner’s insurance and property taxes. Each year the projected amount due is spread out evenly over your monthly mortgage payments, and is why your mortgage payments vary year to year.
There are instances when a mortgagee will allow you to waive escrow depending upon the type of mortgage you have. It is important to honestly assess your financial habits before making this decision. If you are a responsible saver or experienced living with a budget, waiving escrow may make more sense. On the other hand, if you do not always trust yourself with money, or perhaps extenuating circumstances has made your life less predictable, escrow can ensure that you will not miss an important payment.
If you would like to learn more about the home-buying process, choosing the mortgage option that is best for you, even budgeting, you may be interested in a hoMEworks Homebuyer Education Class, hosted by the Maine State Housing Authority.
Our sister company, Newcastle Realty, has partnered with Acadia Lending Group to host educational classes on a variety of topics that affect the home buying process. Check out their website for upcoming events.
Keep your Homeowner’s Insurance Policy up-to-date
One of the most important things you can do whether you have an escrow account or not, is to keep your homeowner’s policy current. Review your policy information each year upon renewal. If you re-mortgage or add a mortgagee, most likely they will require proof of insurance, but follow up with your agent to make sure they have the most current mortgagee information. Sometimes, a lender will update their mailing address or their name, or another lending company will take over another lender’s accounts, it is always a good idea to be pro-active and to pass this information along to your agent.
The Cheney Difference
We are proud to be your local independent insurance agency. Cheney Insurance is a Trusted Choice firm and a recognized Best Practices agency staffed by dedicated professionals. Our goal is to carefully guide you through the entire process of choosing the right insurance products, and then, assisting you through the changing years to maintain the best possible coverage, protecting the things you love most.
Give us a call today with your questions—any question at all—about your insurance policies. We’ll help you understand them better.