Mortgage / Insurance question

[ElizabethG]

Hi all. I couldn't find a thread on this sort of thing, so I decided just to start one and hope somebody with a lot more real estate knowledge sees it and can provide an answer. Last year when I remarried I moved out of my home into my husband's. My old home has not been put on the market, I am still working on cleaning it out and getting it ready. Didn't see a need to hurry with the current housing market being so down. I still owe about $120,000 on this mortgage. My insurance company just sent me a letter saying my homeowner's insurance on that property will be cancelled in one month due to a change in occupancy (nobody lives there, but electricity, water, etc. still on - property is still being maintained, etc.)

What happens now? Does the insurance company also notify my mortgage holder? (WaMu) Can/will the mortgage lender do anything? How expensive is vacant property insurance? Is that type of insurance an absolute requirement? I am having a hard enough time still making the monthly payment, if I have to double or triple the amount of insurance on a property that I no longer live in (but do visit weekly to work on), it will be pretty bad for my finances. Advice??? Thank you!

[chrelsey]

ElizabethG - did you call your homeowner's insurance company and tell them that the house was unoccupied? If so, then you might want to consider calling them back and letting them know that you have decided to use it as a second residence - or something where they don't think the property is sitting vacant. Don't tell them that it is empty (has no furniture), and move a piece or two of furniture back if you need to. When my mom passed away and her house was empty, I called the insurance company to see what I needed to do. They said that as long as I didn't tell them it was empty, then they would continue the homeowner's insurance. Her house sat on the market for almost two years - and no one lived there - and it didn't change our status with the insurance company at all. Now, her house was paid off, so there wasn't a mortgage company involved, but we were still paying all the utilities and the taxes. I would think, though, that if you continue to make the mortgage payment, there shouldn't be any reason for the mortgage company to get involved.

[Veruka]

Hi all. I couldn't find a thread on this sort of thing, so I decided just to start one and hope somebody with a lot more real estate knowledge sees it and can provide an answer. Last year when I remarried I moved out of my home into my husband's. My old home has not been put on the market, I am still working on cleaning it out and getting it ready. Didn't see a need to hurry with the current housing market being so down. I still owe about $120,000 on this mortgage. My insurance company just sent me a letter saying my homeowner's insurance on that property will be cancelled in one month due to a change in occupancy (nobody lives there, but electricity, water, etc. still on - property is still being maintained, etc.)

What happens now? Does the insurance company also notify my mortgage holder? (WaMu) Can/will the mortgage lender do anything? How expensive is vacant property insurance? Is that type of insurance an absolute requirement? I am having a hard enough time still making the monthly payment, if I have to double or triple the amount of insurance on a property that I no longer live in (but do visit weekly to work on), it will be pretty bad for my finances. Advice??? Thank you!

While it's never a good idea to own property without insurance on it, with a mortgage, it would be absolutely mandatory. The mortgage company would be notified, and also would not receive any bills to be paid out of the escrow account. Insuring the vacant property should be cheaper, because you would be insuring the structure ONLY -- not any of the belongings youhad in the house which are not there anymore. So truly, this should help your finances rather than hurting them. I would contact your insurance agent, and also a few other ones, to get quotes on the property with no coverage for contents.

[MsDiva2007]

As an Insurance agent I can tell you most insurance companies don't like vacant homes. The risk is high of someone coming on the property and some sort of loss occuring. If you have already told them it is vacant in order for your policy not to cancel you will need proof of occupancy or a lease agreement.

[ElizabethG]

As an Insurance agent I can tell you most insurance companies don't like vacant homes. The risk is high of someone coming on the property and some sort of loss occuring. If you have already told them it is vacant in order for your policy not to cancel you will need proof of occupancy or a lease agreement.

Yes, I had (innocently) told them when they called to say they would be visiting all the homes of homeowners they insured. (They made it sound like a routine type thing to do this.) When I said that neither I nor my college age daughter lived there anymore, the agent was silent for a moment and said well, that's not good. My husband says I should have never told them it was unoccupied, but I had no idea that would be a problem. I have looked up something called vacant property insurance on the internet and the general consensus is that it is more expensive than regular insurance because there is statistically a higher chance of fire, water damage, theft, etc. when a home is unoccupied. My real concern was what the mortgage company (WaMu) will do when they find out. Thanks to everyone who has responded so far...feeling a little stressed about this right now.

[MsDiva2007]

Yes, I had (innocently) told them when they called to say they would be visiting all the homes of homeowners they insured. (They made it sound like a routine type thing to do this.) When I said that neither I nor my college age daughter lived there anymore, the agent was silent for a moment and said well, that's not good. My husband says I should have never told them it was unoccupied, but I had no idea that would be a problem. I have looked up something called vacant property insurance on the internet and the general consensus is that it is more expensive than regular insurance because there is statistically a higher chance of fire, water damage, theft, etc. when a home is unoccupied. My real concern was what the mortgage company (WaMu) will do when they find out. Thanks to everyone who has responded so far...feeling a little stressed about this right now.

My sister in law has not only a vacant home but a home in the estate of. The home is insured with a company called Essex. I understand that they specialize in hard to insure properties of that nature. You may look them up just to see.If your insure company cancels you Wamu will place insurance on it that also will be expensive.

[ElizabethG]

Thanks MsDiva. I do appreciate the response. I just really can't afford an unexpected expense like this right now.

[famita]

It's been my experience that a vacant home policy is way more expensive due to the possiblity. Could you move furniture back in, have the drapes rehung (if you took them down), and get insurance at another company? When the mort co insures a home, it's typically for the amount of the loan only and is very expensive. Sometimes you need to weed out how you say something and what you say.

[PGM35]

Can your daughter sign a lease to you and you show that to them as you would then have a tenant?

[ElizabethG]

Can your daughter sign a lease to you and you show that to them as you would then have a tenant?

Yessss....but she isn't actually living there and doesn't plan on moving back.

There IS actually still some furniture there - things I am cleaning out and trying to either put in storage, sell or give away. In my present home with hubby, there just isn't room for all my "stuff".

Do you HAVE to have homeowner's insurance when you carry a mortgage?