Vargas & Vargas Insurance

1133 Washington St
Dorchester, MA 02124

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What Is The Purpose Of An Escrow On A Mortgage, And How Does It Work?

mortgage escrow

An escrow account is like a holding tank.

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.

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Caring For Your Motorcycle During the Off-Season in Dorchester, MA

For motorcycle owners in Dorchester, MA, the off-season can be a great time to keep your ride in top condition. With proper care and maintenance, you can ensure that your motorcycle runs smoothly when the spring arrives.

Cleaning and Waxing 

Before putting your motorcycle into storage, you must give it a thorough cleaning and waxing. Use a mild detergent and soft cloth to clean your bike, then apply a wax coating to protect against the elements. This will help to protect your bike’s paint job from any dust or dirt that may accumulate while it’s in storage. It will also help prevent rust or corrosion from taking hold when exposed to moisture. 

Lubrication Maintenance 

Another critical step is lubricating your bike’s moving parts before storing it away for winter. This includes everything from chains and cables to brakes and bearings, so pay special attention to these areas during the lubrication process. You should also check all nuts and bolts to ensure they are tight, as loose parts can cause significant damage down the road if not taken care of now. 

Insurance Coverage Review 

Finally, reviewing your insurance coverage when preparing for the off-season months is always a good idea. Ensure that you have adequate coverage for any potential losses or damages that could occur while your bike is in storage. If you’re looking for a reliable motorcycle insurance policy, look no further than Vargas & Vargas Insurance. We offer competitive rates throughout Dorchester, MA, and beyond—so don’t hesitate to contact us today if we can assist you with finding the proper coverage.

To learn more about our insurance policies or get started with a free quote, don’t hesitate to contact Vargas & Vargas Insurance today! We look forward to helping you get ready for the off-season!

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How A Hard Insurance Market Affects What You Pay For Insurance

In the property and casualty insurance industry, prices, coverage availability, and capacity can be affected by changes between soft and hard markets. Up until now, the insurance industry has been in a soft market for nearly 15 years but is now shifting to a hard market.

In a soft market, there is fierce competition with premiums that are stable or decreasing. To sustain or get more business share, many insurance companies are liberalizing their underwriting rules and lowering what they charge. This makes it possible for insurance brokers to obtain better coverage and better insurance premiums for their clients. A wider range of coverage is accessible, with some additional riders included at little or no extra cost.

The Causes Of A Soft Insurance Market May Include

An active, prosperous economy,

A positive interest rate environment,

Low/favorable claims activity,

A plentiful supply of capital,

And substantial policyholder premium surplus.

The Causes Of A Hard Market Could Be Attributed To

In comparison, a hard insurance market is when premiums are increasing, insurers are not willing to negotiate terms and underwriting standards become stricter. Insurers also pay close attention to rates and manage coverage availability in response to certain factors that shape the insurance market cycle.

Economic downturn/insecurity,

Financial markets turbulence,

Dwindling insurance capital/lessened rivalry,

Disastrous occurrences/heightened claims activity,

And global affairs (e.g., pandemic, climate change, etc.).

For instance, large losses from global natural disasters like hurricanes, earthquakes, and wildfires can generate immense property insurance claims. Additionally, other occurrences can also lead to increased claim frequencies impacting other areas of business., such as Covid-19, sizable litigation remunerations, or a greater number of distracted driving cases.

How does Reinsurance work

You may be wondering about reinsurance. Reinsurance is a form of insurance that all insurance companies take out to protect themselves from large financial risks.

For example, if your home is insured for $500,000, your insurance company may only insure a percentage of this amount; they then purchase reinsurance to cover the rest of your coverage. This will make sure that if there ever is a major loss event, the insurer has enough resources to meet their obligations.

How Economic Conditions Affect Your Insurance

Economic conditions have the potential to influence an insurance company’s capacity to issue new policies. During a recession, businesses may buy less insurance or have lower risks. Revenue might decline, and layoffs occur, which would lead to lower premiums for the carrier. Furthermore, this situation usually results in low-interest rates, which reduce insurers’ investment profits.

When the insurance market starts to harden, it’s imperative to be working with an independent insurance broker with extensive knowledge of the marketplace and strong relationships with multiple insurance companies, and who reviews your insurance policy not just when you first purchase the policy but at renewal time to ensure you have the ideal protection for your requirements at the most competitive rate.

At Vargas & Vargas Insurance, we are always available to you. If you choose us as your provider, we will work hard to make sure you have the most suitable coverage at the most competitive rate. Please contact our office at 617-298-0655 so that we can examine your insurance needs and guarantee that you are fully protected.

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Life Insurance is Really Love Insurance

Life insurance is one of those things that you should never go without. Should you cease to exist, your family will face an incredible financial burden on top of losing your regular income. If you truly love your family, make sure you have a good life insurance policy.

How Life Insurance Relates to Love

When you love someone, you don’t want to see anything happen to them. You’re constantly striving to be in their corner while doing what you can to make their lives easier to manage.

But what happens should something happen to you? How will your loved ones fare financially should the unexpected occur? With the world’s state today, it’s a considerable risk just walking into a grocery store.

Ensuring Sustainable Family Lifestyles

How much of your family’s lifestyle requires your income? I’m not talking about designer clothes or expensive toys every week. A lifestyle could include everything from the types of food your family eats to paying for intramural or city-league sports.

Perhaps you cover everyone’s expenses for going to the gym every month.

Covering Death Expenses

When you die, there is a slew of expenses that follow. For instance, a casket, embalmment, burial plot, headstone, funeral services, and much more tally up very quickly. Even if you plan to be cremated, there is a cost there as well.

Life insurance helps cover those expenses so the ones you love don’t have to worry.

Personal Care for Those You Love

Child care can cost an overwhelming amount of money, especially for someone who lost a second stream of income due to your death. Or, maybe you help cover expenses for dependent caregivers for your elderly family members.

Who is going to take care of those expenses if you’re in a fatal car accident?

College and Education

College tuition and basic education are extremely expensive in the United States. While some students qualify for loans and grants, a lot of them do not.

If you’re paying for your child’s education, are they able to finish school without your income?

Debts that You Co-Sign

There are a lot of reasons why you might co-sign for a loan, property, or other purchase for someone. In fact, it’s quite common to co-sign the financing for an automobile for a child.

If your life comes to an end because of a hurricane, does your insurance help those you love handle those debts?

How Much Does Life Insurance Cost

The cost of life insurance depends on many factors, such as age, health profile, and lifestyle. A 40-year-old in good health can purchase $500,000 of a 10-year term policy for around $20 per month. And the same 40-year-old can purchase 500,000 life insurance policies for around $30 per month. It is important to review your life insurance policy regularly to make sure that it still covers your family’s needs and obligations.

Love Your Family Enough to Be Covered

Sure, a lot of what I pointed out above are hypotheticals. Still, never underestimate the fragility of human life. All it takes is someone not paying attention on the road, a natural disaster, or an act of evil in a public space to end yours.

While some may think it’s unsettling to plan for their demise, it’s better than trying to wing-it should something happen to you. You want the ones you love to be financially protected through your life insurance policy. Otherwise, they could be on the hook for an incredible amount of debt.

At Vargas & Vargas Insurance, we can help you find the best life insurance policies for your specific needs and wants. Contact us today and find out how we can help you protect the ones you love in the event something happens to you.

The last thing you want is for your death to result in ruining your family’s ability to remain sustainable.

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Should I Bundle My Insurance Policies?

One way to save money in premiums is by bundling insurance policies together. This is when you use the same provider for all of your insurance needs. It’s kind of like getting a “buy in bulk” discount.

Most providers will offer discounts for bundling policies because it helps them make more money. Essentially, you’re giving insurance providers more business, and to show appreciation, many will have significant discounts.

However, there are times when bundling might not be the best option. This, of course, depends on your provider. In rare instances, bundling could actually cost you more in the long run.

This can depend on a lot of factors, and as I said, it’s not very common.

Why Consider Bundling Your Insurance?

Perhaps the most obvious benefit of bundling insurance is the cost savings. When combing things like home and auto insurance through a single provider, you could save instead of paying higher premiums to two different insurers.

Another element of bundling is the convenience factor. Instead of having two online portals or two completely different agents, everything is often handled from a single point of contact.

It’s simply much easier to manage overall. Especially if one insurer already has all of your needs covered and knows the ins and outs of your situation.

How Much Can Bundling Insurance Save You?

Every insurer is different. How much you save depends on your provider and how they calculate your rates. However, many of the most popular providers will offer anything from 6-23% by bundling insurance policies.

On average, you could possibly save around 14% of your premiums every year. Again, though, this depends greatly on the insurance company.

In any case, it’s worth finding out how much your insurer will discount by bundling. After all, there’s nothing wrong with asking, right?

Can You Bundle Policies Later?

Most insurers will allow you to bundle policies as time marches on. This means that if you buy homeowner’s insurance and then two years later decide to add automobile coverage, you still have access to discounts.

Remember what I said earlier; it’s all about giving the insurer more business.

There might be some who don’t offer the best discounts if any at all. In that case, I suggest calling around to see if you can find a better alternative.

What Happens if You Cancel One of the Policies?

Canceling one of your policies may wind up costing you more money. Obviously, without a “bundle” of different services, you’ll revert back to the normal annual premium.

Then again, this also depends on how many accounts you’ve bundled together. Some companies will bundle home, auto, and life insurance. If you cancel, say, the auto insurance, you might still get the discount since you have home and life insurance policies remaining.

You should contact your provider to find out more information about what you can bundle together.

Why It’s Important To Work With A Local Independent Insurance Broker

While it may be tempting to go with the big national insurance companies, working with a local independent insurance broker can save you money on your insurance. Here’s why:

1. As a local independent broker, we have access to a variety of insurance companies, so we can shop around and get you the best possible insurance rates.

2. Local independent broker, we know the ins and outs of the insurance market in our area, so we can help you find discounts and savings that you might not be aware of.

3. Bundling your insurance policies with a local independent brokercan often save you money. That’s because many insurers offer discounts for bundling multiple policies with the same insurance agency.

4. Working with a local independent broker gives you someone to talk to face-to-face about your coverage needs and concerns. You’re not just a number to us, so we’ll take the time to really understand your situation and find the best coverage for you.

Bundling Insurance Policies Can Save You Money

How much can you save by bundling policies? At Vargas & Vargas Insurance, we’ll help you answer that question by using our network of providers to find the best deals for you. Contact us today to see how much we can help you save by bundling your policies together.

It’s convenient, and it could result in saving quite a bit on your premiums.

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How Your Credit Score Will Influence Home Insurance Rates

There are many things that will affect how much you pay for home insurance. Of these, a credit score can make a big difference in how much you pay.

Much like using your credit to secure a loan or an account with most banks, your score will help insurers determine risks.

For this, they’ll use a “credit-based insurance” score, or CBI.

The Key Difference Between Credit-Based and FICO Score

Although both the CBI and FICO use the same data, the processing is a bit different. Insurers are using most of the data associated with your credit, but not all of it.

Unlike trying to apply for a line of credit, the CBI is essentially used from the perspective of property risks and management.

What Affects your Credit-Based Insurance Score?

Essentially, a lot of the same factors are at play when using a credit-based insurance score as everything else. As I said before, the biggest difference is what data is used when determining your rates.

So, what kind of things will affect your CBI?

Length of Credit History Affects Your Score

The longer you have a history of credit, the better. Unfortunately, this can hinder some of the younger people looking to buy a home and secure insurance.

This is why it’s important to start working on your credit as soon as you’re able.

Credit and Bank Accounts in Good Standing

The number of bank and credit accounts you have in good standing are great benefits toward your CBI and FICO scores. This tells insurers that you’re responsible and can manage your finances well.

In fact, a lot of people will hang on to bank accounts they don’t necessarily use often simply because of how long they’ve had it.

Zero Late Payments and Your Credit Score

Having no late payments on your account is another vastly important factor.

Now, this doesn’t mean that a few late payments here and there will result in an overwhelming poor score. But keep in mind, they will affect your insurance rates.

Overall Credit Usage

How many credit accounts do you have maxed out? The percentage of how much credit you have available for each account will weigh in on your CBI.

Try to pay down your credit as much as possible when applying for new accounts or when looking for new insurance.

Debtor Collection Issuance

Have you had debt collectors call you up in the last seven years? Having a debt collector against your credit score will impact virtually any type of account.

But keep in mind that every agent is different when figuring out your CBI. Having a debtor against your credit may not weigh too heavily, depending on the account.

Recent Multiple “Hard” Hits Affect Credit Score

Having several hard hits on your recent credit history will decrease your score. Mostly, this is because it throws up a red flag to issuers that you run the risk of over-extending your monthly finances.

In other words, don’t apply to every credit card company that comes your way right off the bat. Too many recent inquiries will sink your score quite quickly.

How is Your Credit Score for Insurance Rates?

A poor credit score can make it more difficult to buy properties, but it can also increase your home insurance premiums. At Vargas & Vargas Insurance, we’ll use our network to find the best policies for you. Contact us today to find out how we can help you, even if you have terrible credit.

You may wind up saving more than you thought.

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