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I have rented my house out to tenants, and my escrow payments are huge
Posted on 12/30/14 at 4:43 pm
Posted on 12/30/14 at 4:43 pm
Sorry the full question wouldn't really fit -
If I'm paying $340/month in escrow for insurance, property tax, and PMI and $750/month in mortgage and decided to switch it to a rental dwelling, how much more should I expect to pay in insurance? State of Alabama but I wouldn't mind hearing Louisiana answers too.
My tenants would have renter's insurance as well.
EDIT - Changed the subject to remove the hypothetical
If I'm paying $340/month in escrow for insurance, property tax, and PMI and $750/month in mortgage and decided to switch it to a rental dwelling, how much more should I expect to pay in insurance? State of Alabama but I wouldn't mind hearing Louisiana answers too.
My tenants would have renter's insurance as well.
EDIT - Changed the subject to remove the hypothetical
This post was edited on 12/31/14 at 10:25 am
6
Posted on 12/30/14 at 4:47 pm to StringedInstruments
Well, you would probably not have much, if any contents coverage, but your premiums for the structure and liability would go up, I assume.
I would call your insurance agent and ask them to run some numbers.
I would call your insurance agent and ask them to run some numbers.
Posted on 12/30/14 at 4:50 pm to StringedInstruments
Usually, when you switch your HO policy to a Landlord policy, your insurance goes down, as your personal contents coverage is decreased.
Posted on 12/30/14 at 4:58 pm to CherryGarciaMan
quote:
Usually, when you switch your HO policy to a Landlord policy, your insurance goes down, as your personal contents coverage is decreased.
That's what I was thinking.
And that's what I remember being told.
But I just got a notice from my mortgage company saying I'll be $910 short for next year with insurance and that my monthly payment will be going up.
I called my insurance agent and his secretary said, "I think it just is what it is."
Soooo...switch insurance companies?
Posted on 12/30/14 at 5:12 pm to StringedInstruments
It all depends.
Who are you with?
How long you've been with them?
Do you have any claims?
Are you grandfathered in to older policies?
It's never bad to shop around, but from everything I know the rates in AL are going up nearly across the board.
Who are you with?
How long you've been with them?
Do you have any claims?
Are you grandfathered in to older policies?
It's never bad to shop around, but from everything I know the rates in AL are going up nearly across the board.
Posted on 12/30/14 at 5:58 pm to StringedInstruments
Make sure to read your mortgage before you rent it. Most standard mortgages have an owner occupancy clause.
May want to run it by your mortgage company first.
May want to run it by your mortgage company first.
Posted on 12/31/14 at 10:20 am to CherryGarciaMan
quote:
Who are you with?
How long you've been with them?
Do you have any claims?
Are you grandfathered in to older policies?
It's never bad to shop around, but from everything I know the rates in AL are going up nearly across the board.
ALFA
Since 2007
No
Maybe?
I'm getting hit hard with this. Just talked to another agent in the company who said that I was told wrong that my insurance would not go up. He said since it was changing to a rental, it was going to go up 40-50% regardless due to it being a higher risk.
The home does have a $1000 deductible. He mentioned raising the deductible to $2000 to help offset the costs.
I'm just curious how anyone makes money renting out their house if the insurance (on a $170k home with a new roof) goes up 40-50% instantly.
Unfortunately also, I signed the paperwork. There was a mix up with the paperwork a year ago and I got hit with a $430 escrow bill. When I went in to get that fixed, which was an error on someone's part - ALFA said it was the mortgage company but I don't believe them - they gave me the paperwork to sign for my new policy. I didn't catch that my premium was that much higher than before. My fault. But my agent should have fricking clarified before I decided to move out of that goddamn house that I was going to be paying $130 more a month.
Posted on 12/31/14 at 10:44 am to StringedInstruments
I've got a fair number of rentals now and my insurance costs are $45 - $60 per month per property.
None are in flood zones though.
None are in flood zones though.
Posted on 12/31/14 at 10:48 am to NEWBIE
quote:
Make sure to read your mortgage before you rent it. Most standard mortgages have an owner occupancy clause.
I'm looking at renting out my fiance's house in a few months after we get married and asked about this with a couple people I know in real estate. I was told that as long as it was originally purchased and used as owner occupancy for a reasonable amount of time, it can be converted to a rental causing no issues with the mortgage covenants. Can anyone else confirm this?
Posted on 12/31/14 at 10:50 am to Brummy
quote:
I was told that as long as it was originally purchased and used as owner occupancy for a reasonable amount of time, it can be converted to a rental causing no issues with the mortgage covenants. Can anyone else confirm this?
Confirmed. Most want an owner occupant for about a year. Even then, nobody checks or cares.
Posted on 12/31/14 at 10:52 am to I Love Bama
quote:
I've got a fair number of rentals now and my insurance costs are $45 - $60 per month per property.
None are in flood zones though.
So what do I need to say to get this fixed?
I called a different company and they said they wouldn't take me because I don't own my primary dwelling.
I'm renting a house while I'm in graduate school. The house I own that I couldn't sell is being rented to tenants. We all have renter's insurance.
The house isn't in a flood zone.
Posted on 12/31/14 at 10:53 am to Brummy
quote:
I'm looking at renting out my fiance's house in a few months after we get married and asked about this with a couple people I know in real estate. I was told that as long as it was originally purchased and used as owner occupancy for a reasonable amount of time, it can be converted to a rental causing no issues with the mortgage covenants. Can anyone else confirm this?
Yeah we refinanced about two years ago and they said that as long as we lived there at least a year, it would be fine. Even then, he said they would never check.
Posted on 12/31/14 at 11:07 am to StringedInstruments
Call another insurance agent and get some quotes for the rental house.
Posted on 12/31/14 at 12:56 pm to StringedInstruments
One rental I have costs $732/yr for a fire policy, + ~ $2900 in property taxes, but I am quite certain I can sell it for $290k, +/- a few k.
Posted on 12/31/14 at 3:00 pm to StringedInstruments
Since you want to hear LA specific answers when switching from a personal property to a rental property you have to consider the loss of the Homestead Exemption on property taxes. That was one thing I faced.
Posted on 12/31/14 at 3:13 pm to lsu13lsu
quote:
loss of the Homestead Exemption
Which also changes the amount of taxes due, which in turn changes the amount the mortgage company will escrow, which in turn notifies them of a change in circumstances with the property. Possibly causing them to look into the use of the home.
People are giving advice from their experience of rolling the dice. The mortgage company may not care; but if they do, they could accelerate payment due to violating the terms of the mortgage.
Posted on 12/31/14 at 3:43 pm to NEWBIE
Can you not get rid of the PMI???
Mortgage company is not going know unless you get behind. I would let them challenge the covenents sometime down the road.
I doubt anyone is going to challenge the homestead exemption until you put another house in your name. Nevertheless I doubt losing the homestead exemption would cost you what that PMI cost.
Mortgage company is not going know unless you get behind. I would let them challenge the covenents sometime down the road.
I doubt anyone is going to challenge the homestead exemption until you put another house in your name. Nevertheless I doubt losing the homestead exemption would cost you what that PMI cost.
Posted on 12/31/14 at 3:49 pm to StringedInstruments
first you need to know why your escrow went up, was it because of increase in insurance premium, increase in property tax or because of a calculation (it usually takes a few years for the mortgage company to get the escrow straight)
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