If you change your homeowners insurance to a lower rate does your escrow rebate you the difference?
by Mortgage Rates on Tuesday, November 9th, 2010 | 4 Comments
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If you change your insurance policy then your escrow will credit you upon renewal. Therefore it can drop your monthly payment for the next year if it has a surplus.~~
When they do an escrow analysis (once a year) if there is too much money in the account they will refund you at that time.
You should have the same dwelling amount on the new policy that the old policy had or more. Rebuilding costs have gone up and not down.
I would be very concerned when a company can drop your premium that much. Be careful to make sure they have not cut your coverage or other options that you might have had under the old policy.
If everything checks out then fine. You might even want to give your old agent a chance to look over the new policy and see if there are differences. I am sure that person would be happy to do that because it gives them an opportunity to try to save their business if they can find that something is missing or wrong with the new policy.
Every year, once a year, the mortgage company should be sending you an audit of your escrow account, including both insurance AND taxes. They would at that time send you a refund, or a bill for any deficit, and adjust the future escrow payments accordingly.
Escrows are seperated, and any excess cannot be applied to the principal. They do this once a year – so you’ll have to ask them, when the escrow account is reviewed.
And I’d be very, very cautious about the coverage on the new policy – building materials and labor costs do NOT go down, they only go up. If the new company is seriously lowballing you just to get the business, or if they made a crucial calculation error, YOU will be the one to pay for it come claim time. Travelers is a GREAT company. There are some other ones out there, that aren’t quite so great.