Every location has its own practices when it comes to insurance premiums and what affects them. In this case, I’m talking about the insurance surcharge you could face after an accident in Massachusetts. Today, I break down the steps for the appeal process and why it’s important.
What is an Insurance Surcharge?
A surcharge on your insurance is a fee that is added to your premiums. This usually happens if you’re regularly involved in at-fault accidents, pay your premiums late, or have a lapse in coverage.
However, a surcharge can also affect your insurance if you’re simply adding another vehicle to the policy. In those cases, though, you can work with the insurer to see if there are discounts available for multiple-car policies.
In this article, I’m focusing on appealing the insurance surcharge that comes after an accident.
Steps to Appeal the Insurance Surcharge
The insurance surcharge will kick in if the insurer deems that you are more than 50% at fault. According to Massachusetts law, you have up to 30 days from the notice of the surcharge to file an appeal with the Division of Insurance Board of Appeal.
1. Complete and submit the Appeal Form that is located on the backside of the Notice of At-Fault Accident Determination. You’ll need to enclose the $50 filing fee made payable to the Commonwealth of Massachusetts. The address is located on the Appeal Form.
2. You will receive a notice in the mail acknowledging the receipt of your appeal.
3. In approximately three weeks, you’ll receive a hearing notice. At this hearing, you can attend yourself, submit a statement at least five days before the hearing, or have a representative appear on your behalf.
4. The hearing will last around 15 to 20 minutes to determine the justification of the surcharge.
5. About two to four weeks after the hearing, you’ll receive a decision from the Board of Appeals as to whether the insurance surcharge will remain.
Note: If the surcharge is added to your insurance premiums, you’ll still have to pay the additional amount. Otherwise, the insurer can cancel your policy.
How Much Will Rates Increase if You Don’t Appeal?
The increased amount of your insurance premiums will depend on a lot of factors. It’s not exactly a one-size-fits-all answer, to be honest.
For example, rate increases are subject to:
your previous driving record.
how many years you drive that are accident-free.
how often you file insurance claims.
Essentially, it all comes down to how much of a risk the insurer deems you for coverage. If you have a spotless driving record and make your payments on time, the increase might be nominal.
Use the Appeals Process Correctly
The appeals process is meant to help the innocent avoid paying out when accidents were clearly not their fault. As long as you explain your position to the magistrate, and are not at fault, you may avoid these extra fees.
At Vargas & Vargas Insurance, we can help you further understand the process and what you need after an accident. Contact us today to understand your options and what you can do to avoid issues like this in the future.
Auto insurance is not only necessary to financially protect you in the event of an accident, but it’s also the law when you’re behind the wheel. Unfortunately, a lot of us wind up paying far more than we need to for this protection. Today, let’s go over the basics of getting the best rates for your auto insurance.
There is a bit more at play than just finding a “cheap” company.
How to Get the Best Rates for Auto Insurance
In most instances, you’ll have to demonstrate that you’re not a high-risk driver. The higher the risk to the insurance company, the more you’ll pay.
Keep a Clean Driving Record
Perhaps one of the most vital methods of lowering your insurance rates is by keeping a clean record behind the wheel. This goes along with most “Good Driver” discounts as it demonstrates how low of a risk you are while driving.
Group Discounts with Work or Organizations
Some organizations and places of employment offer group discounts. This is when an insurance plan is offered to members and is usually considerably cheaper than getting one of your own. The catch is that sometimes these will have “enrollment periods” of maybe once or twice per year.
Increase the Deductible of the Auto Insurance
In some cases, you’re able to increase the deductible of your insurance policy. This means you’ll need more money upfront in the event of repairs and such. The trade-off is a lower annual premium as you’re taking on more of the financial responsibility yourself.
Work on Your Credit Rating
Like most other things in life, your credit rating can affect your auto insurance premiums. The better your score, the more likely you’ll have to pay less. This is one of those things that can take some time to improve. However, the end results are often worth the effort.
Anti-Theft Device Discounts
Many insurers will have discounts available if your vehicle has anti-theft devices installed. Alarms, cut-off switches, and other technologies prevent people from stealing your vehicle. This means the auto is at a lower risk of being stolen, which then reduces the risk to insurance companies for claims.
Don’t Pay for What You Don’t Use
If you don’t use a specific service, don’t add it to your insurance policy. For example, there are a lot of people who pay for roadside assistance but have never used it. Talk with your agent and find out what you can remove that you know you’ll never really use.
Shop Around for Auto Insurance Rates
Another one of the most common methods of getting the best auto insurance rates is by shopping around. However, don’t assume cheap equates to being better. Sometimes the lower price tag comes with a vastly reduced capacity of financially protecting you.
Consider Pay-per-Mile Insurance
Some insurance companies will offer a pay-per-mile plan. This is when you need insurance but don’t really drive all that much. It goes along the lines of a “Low Mileage” policy. These are usually the most ideal for students and people who drive less than a few miles per day.
Annual Policy Updates
Lastly, don’t forget to update your auto insurance policy at least once per year. A lot of things can change in 12 months, including your credit rating and good driving record. Not to mention it gives you a chance to customize the policy further depending on your foreseeable needs.
Auto Insurance is a Necessity
A lot can happen when you’re in control of more than a ton’s worth of steel. It takes a fraction of a second for an accident to occur whether you’re paying attention or not. Having the best auto insurance for your needs will protect you from breaking the bank in most cases.
At Vargas & Vargas Insurance, we understand just how imperative insurance is, especially in today’s world. Contact us today to find out how we can help you find the best rates possible for your situation. We’ll use our network of companies to help secure something affordable that will keep you safe.
Many experts agree that owning property is a great investment, as the need for housing will always exist. Owning and managing a rental property can be very profitable, but what are the pros and cons of this venture?
Making a house feel like a home is made up of many things, from our belongings, pets, and family. Therefore, having the right insurance coverage to protect you from any unforeseen events is essential. As each home is unique, your insurance should be tailored to your needs and requirements. Otherwise, you may find that your claim for damages isn’t covered and have to pay for it yourself.
Vargas & Vargas Insurance can help you in making sure your home is fully insured. Don’t put off checking if your coverage is sufficient until it’s too late! Homeowners are sometimes shocked to discover some areas of their insurance policies are not covered. Although dealing with insurance can be tricky, we can help make it easier by providing some helpful advice about what may be overlooked or insufficiently covered in your policy.
A Comprehensive Coverage Level
When it comes to ensuring your home is secure, the insurance policies you choose should be comprehensive and detailed. Many insurance holders purchase coverage at various levels, with one being more extensive than the other. Generally, we suggest getting the highest tier available as it usually provides sufficient protection for what we need. Some agents start with a lower tier and gradually increase their coverage; however, this is not recommended when it comes to home insurance as there can be areas left unprotected or overlooked.
When protecting the things we value most, it’s not advisable to skimp on specific areas as you will discover that you get what you pay for. You need to ensure, first and foremost, that you have the right protection at an affordable cost, even if it is not the lowest price available.
Sufficient Insurance Coverage Levels
Your home insurance policy consists of six different coverages, each with its own coverage limit – the maximum sum your insurer will pay out should you file a claim. Some insurers may provide lower limits to reduce the cost of the quote they offer, however this could be inadequate for certain types of claims. In what follows, we will outline each coverage and suggest suitable limits for each.
Dwelling
Dwelling coverage safeguards the physical structure of your dwelling from destruction caused by a range of causes. With regards to dwelling, you are not permitted to decide on the coverage amounts. Instead, it is determined automatically depending on the cost of replacing your home.
Other structures
Home insurance policies also cover damage to structures not attached to the main house, such as fences, garages, pools, driveways and sheds.
Generally, the amount of coverage is set at 10 or 20 percent of the amount for the dwelling coverage; however if you have expensive other structures that are worth more than these limits allow for, you can purchase additional coverage.
Personal property
This coverage applies to any possessions you have in your house and garden. If they are destroyed or taken, the insurance will pay to repair them or get new ones.
The amount of coverage is usually equivalent to 50-70% of the dwelling protection provided by the insurance company, and this limit is pre-set.
Loss of use
If you need to leave your home due to a disaster or emergency, loss of use coverage will pay for temporary housing. Generally, the maximum amount covered is 20-40% of the dwelling coverage.
Medical payments to others
This policy provides financial protection for medical costs incurred by someone hurt while on your premises. This includes damage from falls, cuts, dog bites and other injuries.
Generally speaking, the minimum coverage limit for this part of the policy is $5,000.
Personal liability
When a person is hurt on your property and you are sued for it, this section of the policy can help pay for medical bills, legal costs or settlements.
It is essential to choose a coverage limit that is high enough – usually between $100,000 and $1 million – as lawsuits today can be expensive. In some cases, they may even exceed that amount, which is why we advise people to get umbrella insurance too.
Additional insurance options
This optional coverage can be a useful addition to your policy; it is not included in the main categories listed above. Personal injury coverage safeguards you from potential libel, slander, or defamation lawsuits.
Sewer and Water Backup Endorsement
This coverage, which is an additional expense, covers any overflow due to backup in the plumbing system, such as pipe backups, drain blockages, sewer line clogs or sump pump overflows. This is distinct from the standard overflow protection, which guards against backups in toilets, sinks and drains.
Service line coverage
This coverage, available for an additional fee, covers any repairs that need to be made to pipes or wires coming into your premises. These may include electrical lines, water pipes, or septic lines. The typical limit for this type of coverage is usually between $10,000 for services and $50,000 – 100,000 for equipment repair.
Equipment breakdown coverage
This coverage compensates for any damage to your home appliances (air conditioning, furnaces, etc.) caused by power surges, electrical shorts, mechanical failures, motor burnout or operator mistakes.
Scheduled Items
Scheduling items is a great way to guarantee your valuables are protected. By paying a few extra dollars, jewelry, art and other precious objects will be insured if they are damaged or stolen.
One of the benefits of this policy is that if you make a claim there is no deductible and mysterious disappearance (losing an engagement ring down the drain) would be covered too. T
o avoid having to pay out-of-pocket for losses, we recommend speaking with your insurance agent to ensure these important coverages are included in your policy.
New Additions and Alterations Yo Your Home
Making improvements to your home can be enjoyable, but it is important to evaluate your insurance policies to guarantee that any new changes are adequately insured.
Adding value to your property through renovations or new additions requires special attention when reviewing your home insurance policy. Not only does a stunning kitchen renovation affect the look of the house, but also any expansion of the square footage should be noted as well. If you are increasing the size of your house, then you need to modify the limits for dwelling coverage. Likewise, if you are making significant changes in outdoor areas such as a swimming pool or patio area, then other structures limits need to be adjusted accordingly.
Examining any considerable alterations to your home can be a beneficial technique to review and adjust your existing insurance policies, or search for another provider if you don’t feel satisfied with the amount of service from your present insurance company.
Working Remotely Or Running A Business From Your Home
It is easy to think that working from home would be included in a typical home insurance policy, given the increase of people who do this. However, this is not necessarily true. If you are just doing paperwork at home in your pajamas, there is no need for extra coverage. However, if you are starting a business from your house such as selling jewelry or running a photography studio, it may be necessary to take another look at your policy since some risks associated with those kinds of businesses may not be covered by the standard plan.
When talking to your insurance agent about any business activities conducted in your home, they will confirm if it is a “permitted incidental occupancy”. This would qualify you for restricted liability and property coverages. In the event that your business venture isn’t covered by this exception, you will need to get a complete commercial insurance policy to ensure proper protection.
Starting a home business can be an economical way of entering many industries from the comfort of your own home, but it is essential to take all the necessary precautions to ensure that the business succeeds.
Local Independent Insurance Broker
It can be difficult to know how to best insure our homes, but these tips should help point you in the right direction for obtaining the most suitable coverage. If you still have queries regarding your policy or would like further information, Vargas & Vargas Insurance will be happy to answer your questions; contact us at 617-298-0655.
The agents at Vargas & Vargas Insurance serving the Dorchester, MA area are happy to explain the importance of having a renters insurance policy.
Many people who rent their home, apartment, or other types of home are under the impression that their landlord’s property insurance policy will cover their personal belongings, but that is not the case. While most landlords in Massachusetts are required to have property insurance on the properties they own, it does not cover the belongings of the tenants living in these places. This is why a renters insurance policy is so fundamental for all tenants to have in place.
What Does Renter’s Insurance Cover?
Renters insurance will cover all of your personal belongings, such as your clothing and toiletries, furniture, appliances, and anything else you have purchased for your home. This means that if your house catches on fire, you will not lose everything you own because your renter’s insurance policy will assist you in replacing the items you lost and then getting back on your feet. A renters insurance policy can also assist you if a natural disaster occurs and destroys or damages the home you are renting or if the place is vandalized. A renters insurance policy can also assist you in paying for items that are stolen in a burglary.
Contact Vargas & Vargas Insurance
To obtain an adequate amount of renters insurance for your situation, you will need to create a policy. Call the experienced and knowledgeable renters insurance agents at Vargas & Vargas Insurance serving the Dorchester, MA area today to obtain a quote and to get your renter’s insurance policy started!
Service line breaks can be costly and unexpected, as they are not usually visible to homeowners. These lines provide water, gas, electricity, and other essential services to homes. At Vargas & Vargas Insurance we’ve seen how damaging a service line break can be when homeowners must pay for repairs out of pocket due to a lack of coverage on their homeowner’s insurance policy. Homeowners should only have to worry about having to dig up their garden for access if there is a punctured pipe – not the full cost of repairs too.
In this article, we’ll explore the optional endorsement you can add to your policy that provides protection for your home from any service line damages, as well as what is and isn’t covered in the policy.
Does Home Insurance Cover Service Lines?
Service lines are an important aspect of a home, but they are not usually included in a typical homeowners insurance plan. However, it is possible to include coverage for service lines by purchasing an extra endorsement from most insurers. This type of coverage provides protection from any unexpected expenses caused by damaged service lines on the property, such as tree roots blocking water pipes or cracked sewer lines. It would cover the costs for fixing or replacing these utility lines, including the expensive digging required to access them and any landscaping that may be disturbed during repairs.
Once your deductible has been paid, your insurance provider will cover the costs of repairs or replacements. Service line breaks can cost anywhere from $5,000 to $10,000, so it is beneficial to add this endorsement to your policy in order to avoid incurring these large expenses out of pocket.
Damages That Are Covered
Service line coverage endorsement typically covers damages such as:
Wear and tear
Rust, decay, deterioration, and corrosion.
Additionally, it may cover damage from tree or root obstruction or
Vermin, insects, or rodents.
Landscaping or excavation accidents,
Freezing,
Collapse, and
Mechanical or
Electrical breakdown may also be covered.
Weight from cars can cause the collapse of an above-ground structure.
The Types Of Services Provided Include:
Examples of the various services that are part of a house can be seen here.
Telephone cable lines
Water Pipes
Drains,
Natural gas
Sewage
Fuel
Sprinkler systems
Liquid flow lines
Steam
Fiber optics
Buried electric wires
Types Of Service Lines Not Covered
These service lines are not included in the service line coverage.
Fuel containers
Cabling or pipes that traverse a body of liquid
Sewage systems
Wiring or tubing that isn’t linked up and ready to go
What Does Service Line Coverage Cost
The cost of this coverage is actually very affordable and provides important protection. This coverage would usually cost between $50 and $100 per year for the $10,000 to $20,000 of additional coverage it offers on top of your homeowner’s insurance policy.
Overall cost and premium would vary depending on the insurance carrier. Because this coverage is so affordable and offers important protections, Vargas & Vargas Insurance tends to recommend this coverage for all of our client’s policies.
Protecting your home from service line breaks
Staying on top of the upkeep and inspections of your home can be tricky, so it’s a good idea to ensure you’re protected from any possible damage by having comprehensive coverage in your homeowner’s insurance policy. As a homeowner, it is essential to understand what is included in your insurance policy and the areas where you may not be covered.
Your Local Independent Insurance Broker
Vargas & Vargas Insurance is dedicated to providing customers with the best service possible. We are independent brokers and work with many financially strong insurance companies to customize an insurance plan that meets the individual needs of our clients. For four decades, we have been helping homeowners understand the significance of having the proper homeowners insurance.
When buying a new house, getting help from a trustworthy insurance agent and an experienced mortgage broker is essential. Even if you have bought thirty homes before, you may not realize that homeowner’s insurance can complicate the mortgage approval process in Boston, MA.
Mortgage Company Requirement
When obtaining a loan from a bank or other lender, you will be expected to provide proof of an insurance policy sufficient to either rebuild the home or cover the mortgage amount. Your chosen mortgage broker or loan officer has to meet the lender’s standards, but it is also important for your home insurance policy to cover what it would cost to reconstruct your house in case of a claimable event and not just the value of the mortgage.
Replacement Cost Versus Mortgage Amount
It is likely that the amount to reconstruct your home will be different from the mortgage amount you take out. You certainly don’t want to miss the difference in case of a disaster such as a fire. For example, if you borrowed $250,000 after making a down payment of $50,000, that means the house is worth $300,000. But reconstructing it (including labor and materials) could cost up to $375,000. It is important to remember that there is a variation between buying and rebuilding your house.
An appropriate homeowners insurance policy would cover up to $375,000, not the amount of your mortgage.
The Mortgage Company Binder Requirement
Your mortgage broker needs to see an insurance binder with the bank’s name and the proper language. Failing to provide this correctly could lead to a postponement of the closing date. To ensure that you are prepared, a reliable Boston MA, mortgage broker will supply the exact language the bank requires and thoroughly analyze the binder prior to the closing. This way, they can make sure that the binder contains all of the necessary information and meets all of the guidelines set out by the bank. They can also help ensure that the binder is properly formatted and all of the necessary details and terms are included. This can help avoid any potential issues or delays on the closing day. By taking these steps, you can be sure that you are well-prepared for the closing and that everything will proceed smoothly
When is a great time to shop around for your insurance binder
We recommend calling local independent insurance brokers around the time that your offer is accepted and you have scheduled the home inspection process. This will give your insurance broker enough time to shop around for the best coverage at the best price for you and your new home.
Insurance Discounts
At Vargas & Vargas Insurance, we recommend that homeowners bundle their house and car insurance to get all the possible discounts. We work closely with the top mortgage brokers to ensure they have the necessary paperwork done on time; having an insurance binder is a key part of getting a home loan approved. We are experienced in dealing with all mortgage brokers in Massachusetts.
Local Independent Insurance Agency
Vargas & Vargas Insurance is a local independent insurance broker, we work for you, the customer, and not any one insurance company, and we always have time for you. We shop around with many local and national insurance companies to offer you a tailored fit insurance policy for your specific needs. We have been helping first-time home buyers for over 40 years and teaching them about the significance of their homeowner’s insurance, call us today.
Experiencing a car crash in an unfamiliar place can be frightening. Not only must you cope with the emotional and physical effects of the accident, but you’re in unfamiliar surroundings. You may have many queries at once, but the first one is likely to be “Do I still have insurance coverage when I’m not home?”. Let’s look into this matter further.
Where Does My Policy Cover?
You don’t have to be concerned if your auto insurance doesn’t seem to apply in other states; most policies cover all 50 states, and the U.S. territories such as Puerto Rico, and even the Canadian provinces. To make sure you understand exactly what your policy covers before traveling with your vehicle to another state or country, you should speak with an insured attorney. Note that going into Mexico or other South American countries may not be included in your insurance coverage.
What is included in my insurance coverage?
If you are involved in an accident out of state, your car insurance will adjust to meet the requirements of the state where the accident occurred. For example, if you are from Massachusetts, your car insurance will have minimum liability limits of 20/40/20 for property damage and personal injury protection (PIP). If you are involved in an accident in Georgia, their state requires minimum liability limits of 25/50/25 for bodily injury and property damage liability.
If you are in an accident in Georgia, your insurance policy’s limit for liability will automatically increase to the state’s minimum.
If you’re driving in a state with a lower liability limit than your home state, your insurance policy will provide the maximum coverage on your policy, even if it’s more than what the state you’re visiting requires.
What if the state does not have a “no-fault” policy?
In states that have a no-fault system, drivers must carry at least $10,000 in personal injury protection (PIP) coverage. This means that if an accident happens in one of these states, the PIP coverage will be used to cover any injuries regardless of who was at fault. In contrast, tort states do not use a no-fault system and the negligent driver is held responsible for any injuries resulting from an accident.
If you suffer an injury caused by a careless driver while travelling in the state of Georgia, which is a “fault” state, the driver would be held accountable for your injury and related costs. The law of Georgia will decide how to settle the incident and the insurance policy held by the responsible driver will determine how medical expenses and lost wages are dealt with.
In a no-fault state, the minimum PIP coverage required by law is the same for both Georgia residents and Massachusetts drivers. The governing law in a no-fault state will be based on the state in which the accident occurred.
What is the best way to deal with a car accident occurring in another state?
Always follow the standard auto accident checklist when involved in a crash, which includes checking for injuries and the safety of passengers, calling the police and emergency services, assessing and documenting damage, and contacting your insurance company.
Depending on your insurance policy, your insurance may also cover additional expenses such as towing or repair costs.
When speaking with your insurance company, be sure to let them know that you are in a different state so they can determine what coverage is available to you..
Auto accidents can be confusing, so make sure to discuss your accident with your local independent insurance agent
Local Independent Insurance Agency
Vargas & Vargas Insurance is a local independent insurance broker, we work for you, the customer, and not any one insurance company, and we always have time for you. We shop around with many local and national insurance companies to offer you a tailored fit insurance policy for your specific needs. We have been helping first-time home buyers for over 40 years and teaching them about the significance of their homeowner’s insurance, call us today.
In Massachusetts, all drivers are required to register their vehicles and purchase compulsory auto insurance coverage. To ensure that drivers comply with state insurance laws, drivers must turn in their license plates before canceling their auto insurance policy. And if you are transferring your Vehicle’s ownership, it is your responsibility to properly register and insure the car before driving on state roads. Leaving your license plate on the car could make you liable for the actions of another driver.
Before You Turn In The Plates, Are You Planning To Buy A New Vehicle?
If the answer is yes, then you have seven days from the sale of your old car to register a similar one with the same license plates.
In Massachusetts, you have seven days after disposing of a car to transfer the plates to the new vehicle. You must be at least 18 years old, the new vehicle must be of the same type and have the same number of wheels, and you must carry the transfer documents to prove the registration transfer.
To use the 7-day grace period, you must transfer the title of your old car to a new buyer.
It the answer is no, then cancel the plates immediately. This is because your Auto Insurance follows your registration, not the vehicle itself. If you don’t cancel the plates, you will still be liable for any excise tax associated with that vehicle and cannot cancel insurance coverage either.
How Do I Cancel My License Plates
In order to terminate your vehicle’s insurance coverage, you will need to submit a Plate Return Receipt. Here is the link for the state of Massachusetts:
To cancel your plate, you need your email address, the type and number of the plate, the last four digits of your Social Security Number, and a Driver’s License. Once you have finished cancelling your MA plates, please inform our office and send us a copy of the Plate Return Receipt for proof that coverage for the vehicle has been cancelled. As a courtesy to our customers, we offer various RMV services such as Registration and Title Applications, plate transfers, registration renewals etc.
If You Are Junking Your Car
If you have been in an accident, your car might be totaled and not worth selling. Sometimes, old cars simply have little value or have major mechanical problems like a blown motor or damaged transmission. In such a case, you might choose to donate your car to a non profit, Click here to learn more about donating your car, or have your car towed to a junkyard where it will be crushed. Your license plate still has the same function – it identifies you as the owner of the car. As soon as your car is out of your possession, you have no control over what happens with the license plate. Remove the license plate when you take your personal possessions out of the car. This is a good idea to be safe, especially if you are thinking of selling the car
If You Are Returning A Leased Vehicle
When returning a leased car to the dealership, you are still responsible for all of the belongings that came with the vehicle. This includes the license plate. Before returning your leased car, make sure you have everything that came with it, including the second set of keys, cargo covers, spare tires, original floor mats, and third row seats. Remove all your possessions from the car and take off the license plates.
Vargas & Vargas Insurance is always available to help you, with your Massachusetts auto insurance policy, you can contact our team at 617-298-0655 when transferring ownership of a vehicle, turning is a leased vehicle, or donating your car. We can help you understand your auto insurance policy in Massachusetts.
When you take out a mortgage from a bank or lender, they will also set up an escrow account for you. This account is used to pay your property taxes and homeowner’s insurance premiums on time, every year. Even though these costs are annual, your lender will require you to pay a monthly amount towards each cost. This way, the balance accumulates in your escrow account and ensures that these expenses get paid on time. Some, mortgage lenders require borrower escrow accounts because it minimizes the risk of falling short of financial obligations as a homeowner. In a foreclosure, unpaid taxes or insurance can result in liens against the property. This makes it harder for the mortgage lender to recover the original loan.
Lenders have a strong incentive to keep borrowers on track with escrow accounts that smooth out the non-mortgage costs of owning a home. By doing so, they can avoid costly penalties and interest charges.
Should you use an escrow account?
An escrow account is often required when obtaining a conventional mortgage, with a down payment of less than 20%. With an FHA or VA loan, this requirement may not be in place. There are reasons to have an escrow account, such as making payments and covering potential shortfalls.
Assuming you have an option, setting up an escrow account can be a convenient way to pay for mortgage, home and mortgage insurance, and property taxes. The funds collected in the account can provide a buffer if there are any unexpected increases in premiums or taxes.
Escrow Drawbacks
Escrow accounts tie up your funds, but you can earn interest on them. -You may be required to deposit several months of property taxes when you open the account, depending on the time of year.
If Your Mortgage Doesn’t Include An Escrow Account
You will need to be prepared to cover these substantial costs yourself.
Be certain you factor in these additional expenses and remain up to date on your tax and insurance payments. If you neglect to pay your property taxes, the state or local government could enforce fines and penalties or put a tax lien on your house. You could also be faced with foreclosure. Furthermore, if you don’t pay your taxes or insurance, your lender may: 1. Add the amounts to the balance of your loan 2. Include an escrow account in your loan 3. Force place insurance that only covers the mortgage company for the loan amount that you owe them and for you and bill you for it. And this type of insurance bought by the lender, is usually more costly than homeowners insurance that you cover yourself.
At Vargas & Vargas Insurance, we always have time for you. You can reach our team at 617-298-0655 or by clicking here to reach out to us.
