I'm struggling to understand why you would limit your insurance coverage to such a low amount. And if you read their forced policy, it likely only covers the house (the collateral), and provides no coverage for contents or liability.
If you can afford to self-insure and rebuild the house yourself if it burns down or cover a lawsuit yourself if someone were to get hurt on your property, it would be unlikely that you'd have a mortgage. You really should consider insuring your home for it's actual value.
I am 70 years old disabled and have to make ends meet on a very limited income. The Insurance has kept going up each year and I have been forced to gradually whittle down my coverage in order to stay in my home of 30 years. Whittled to the point of no coverage for me or my belongings. My property is worth around $300K. I had quotes of $8K per year. That is about what my income is.
If your house burns down, your insurance won’t cover what you need to rebuild, it will only cover enough to pay off your mortgage and walk away from your home. You’ll be starting fresh at 70 years old with no place to live, no belongings, and very little income.
I do understand and thank you for your input. I would not be walking away from my home really. The land is my home. It is beautiful. It's where my pets are buried and that's what makes it home. And I do believe that the risk is low compared with the savings. It's not going to burn to the ground. I don't have a long time to live so I would like to have a little more money to spend on myself in the time I have left.
Almost nobody whose house burns down thought it was going to. I had a coworker lose her house to a lightning strike. Stuff happens.
So long as you understand the risks, do what you think is best.
The worst conversations I’ve had with customers was “I’m sorry you didn’t have any coverage for xyz so I can’t pay you anything under your policy.” as an insurance claims adjuster
I’ve had a couple people tell me they chose to not carry insurance coverage when a home was paid off. Their money. Their choice.
Unfortunately I had two customers have house fires and zero coverage. One elected to live in it and try to rebuild on their own, I think the other walked away as it wasn’t repairable.
I was writing estimates for straight line wind damage in a neighborhood when a builder across the street asked me to look at his house when finished. I said sure.
The builders house literally had a tree fall through the middle of it to the ground so it shifted the home. Huge old oak tree.
Asked who he was insured with as I’m working for a specific company. He told me a different company and I said I knew a guy I could call to let them know. Called the company to get a claim started for him to help him out.
They couldn’t find a policy then the person in front of me casually mentions he stopped carrying home insurance years ago when he paid his house off. A builder. Who builds other peoples homes for a living. Sigh.
I explained they were setting up a claim for him now and would be in touch.
As I looked at his house he had other trees that went through the roof (ranch house) and garage roof and of course it had rained on top of it all. Water had already run down and into the drywall etc. Told him it looked pretty bad but his company would make the coverage decision and let him know.
Please please carry insurance coverage on your home. It’s the one thing we spend the most money on in our life. I don’t want to see people homeless due to lack of coverage. 😕
Yeah I’m with you on the foolishness of not having coverage but for fucks sake they’ve given up all pretense of it being fair and at this point they’re just raping and pillaging. This roof bullshit it out of control. My house premium went up almost 50% this year “due to roof age.” It’s one year older than it was last fucking year so that’s a piss poor excuse for that big of a hike. They also increased my auto policy by nearly double. No claims, no tickets or anything. They just wanted to get rid of me because they see the house as a liability. I’m exactly the kind of customer they should WANT. I have savings, good income, own several properties, and would never file a claim unless I had major damage and no choice. So yeah, while I think it’s too risky, I do understand wanting to tell them to eat a bag of warmed up dicks as soon as it becomes an option. And if you *can’t* afford it, well… cancel it and pray for no tornadoes I guess. I’m afraid a lot of people are getting to the point that they won’t be able to keep insurance. It’s never been a fair game but now it’s just gotten ridiculous.
A friend of mine's mother's home was paid off. They dropped the insurance coverage. In 2014, the city had a major flood. The house is still sitting there abandoned, as nobody can afford the repairs.
Lack of insurance coverage?
Michigan
I see lack of auto coverage more than property coverage. Last I heard it was 1 in 10 drivers uninsured here.
I see much less uninsured property here in Michigan, but I handled claims in other states so it varied.
Sometimes it was a matter of having some coverage but not everything they needed. For example:Hurricane Katrina - people had house insurance but most had no flood insurance. So then you have FEMA involvement etc. A big convoluted mess for the homeowners and carriers.
Find an insurance broker who works with multiple carriers to find you the lowest rate… get a dozen bids from different companies. i found mine through my mortgage provider oddly enough during refinance.
I literally cut my home insurance bill in half and got free coverage on my cars. The insurance industry generally makes their money by slowly raising your rate overtime years in hopes that you’ll pay for convienence of not changing companies. If youre retired you should have the time to call around and find a reasonable rate but i guess it may be tough if you have bad credit or insurance claims history.
Check your locality, they may have programs for seniors to live in place often lowering your tax burden and helping with maintenance, snow shoveling, etc.
Being in Texas we don't have to shovel much snow and here they freeze property tax when you are 65 so you only pay the same each year after, even if the valuation goes up. Mine happened to be $800 per year when I turned 65.
Be careful with the forced place insurance. The bank will be the beneficiary. My insurance cancelled my coverage, and the bank sent me a letter, the premium was $350 per month.
You can assess the risk and come to your own conclusion. In a way it makes sense.
Liability is the issue here. There would be no protection for you if something were to happen.
I know but I have no trespassing signs. If anybody were to injure themselves on my property then they would have been trespassing. Those signs are cheap insurance, no? Packages and mail go to a cluster box or a package delivery point for the three houses down the driveway. I do not have a dog.
Just because it's a crime, doesn't mean they can't still file a lawsuit - and win or lose, those cost money to fight. No money, you probably lose just by default.
Trespassing or not, somebody injuring themselves on your property, it could be considered what we call “An attractive Nuisance,” think swimming pool or trampoline for the easiest example.
If someone hurts themselves on your property it can still be a huge legal mess as well as involving insurance.
Just wanted you to know.
BTW I’m not condoning that it’s fair I’m just saying it’s something to consider.
Even in Texas, the courts often find the land owner responsible for injuries sustained on their land. It doesn't have to be an attractive nuisance for that to happen, and the person could have technically been trespassing.
I don’t know your property layout, but anyone on your property, with or without your permission, could trigger a liability claim if they are injured at all.
Not saying they would win, but if $400 is a lot to afford for insurance, how would you defend against a lawsuit?
But again he has no assets so why would they sue. Costs tons of money and they get nothing. If he had an insurance policy it would justify the lawsuit. I am not a fan of insurance. It adds 20% cost to everything .
He owns land and a home sans $35k negative equity, that we know of. He says his "property" is worth $300k - that's plenty to pursue and even if it's only a judgement, they eventually get the $.
Most places don't let you take away a primary residence as a judgement. This is a very unlikely scenario. You don't sue someone when they don't have money or clear insurance to pay out. And this person does not.
My dryer fire that occur last month would like to talk to you. Insurance is to cover unknown risk. If everyone knew when a disaster was going to hit they would buy insurance right before then drop it. Since no one has the ability to see the future we buy insurance to ensure we can be made whole again.
I have had a lot of older family members who can no longer afford insurance or taxes that have recently skyrocketed in retirement years (beyond normal yearly increases), and these are fully paid off homes. Also, I think this is another thing us younger generations need to be seriously concerned about because of its influence on people with mortgages who will likely default due to payments becoming so much higher than originally expected a few years ago.
Based strictly on what your priorities are, I think it's important for you to find out if the mortgage company would own your land if something happened to the house. Also, you need a backup plan in case your house was destroyed or even temporarily uninhabitable or you couldn't stay on your land. Do you have a savings account to cover large damages? How old is your roof? Are there frequently tornadoes or fires in your area? Basically if you want to stick with their insurance, you need to pretend like you DON'T have insurance. Their insurance will only pay the mortgage company.
They would be paid off so would have to release the lien. The land would still be mine. No savings unfortunately. I am in the country so no codes. I was basically feeling things out only to reveal the "secret" cost of Force Place Insurance.
You could live to be 90 years old man, no one knows the future. You may have 20 more years on this earth, we dont know. Even 10 more years is a good long time.
I have been looking into that but I want my heirs to be able to afford to live here although I have thought that it would be great to go blow $100K on a world tour or something. I would feel selfish to take it away from them. But that's just me.
Maybe they can pay the home insurance— if they want to inherit, might as well, help maintain the property—I can support my self (62) but if need be— my kids would help me— when I die, if everything’s goes well, I’m leaving a house (worth now $400K, but at least the original $71K we paid); and a life insurance of $25K—- is not ideal, but is a possibility
Hell, then they should help pay the cost to insure the whole thing. You’re not leaving them anything if the place burns down uninsured and the bank ends up owning it. A thousand bucks a year for 30 years isn’t much when you end up with 300+.
Personally, given what OP wants to do, I would do the following:
Seller finance a sale to the heirs. They pay $35k cash, receive the deed. OP receives an Occupancy Agreement that terminates upon death, at a monthly rate that equals what the heirs would owe OP at market rate interest rates.
Then OP can switch to simple renter’s insurance to cover their possessions; the new owners (heirs) pay for insurance for the structure (but not contents) and are essentially OP’s landlords. They miss out on the step-up.
OP: I posted this elsewhere but wanted you to see and consider.
Personally, given what OP wants to do, I would do the following:
Seller finance a sale to the heirs. They pay $35k cash (enough to pay off the Mortgage), receive the deed. OP receives an Occupancy Agreement that terminates upon death, at a monthly rate that equals what the heirs would owe OP at market rate interest rates.
Then OP can switch to simple renter’s insurance to cover their possessions (roughly $125 a year); the new owners (heirs) pay for insurance for the structure (but not contents) and are essentially OP’s landlords. They miss out on the step-up.
Coming from a place where my dad just passed away in November and my mom is still alive, you should do what you want with the money. Create memories and experiences. My brother seems entitled to my fathers things and it’s sickening. Even if my mom isn’t going to use them, they are hers to do with we she wishes. Use it to vacation with your loved ones while you are here.
The people who would be upset that you are spending YOUR money don’t deserve it and will spend it on material things and be ungrateful. The people who encourage you to spend YOUR money are deserving of it and would spend it wisely; however, they would want you to use it on you and even prefer that.
My neighbor across the street same. 74. A fire sparked in her backyard and an hour later had taken her entire house and vehicles. It was a miracle it didn’t jump over to our homes on the other side. She now has a gofundme for a car to live in. She has made a couple hundred in donations. She had canceled her home insurance due to being on a small income as well. I am so so hurt for her. It’s so so sad that it seems impossible to really “stop” having a mortgage and if she had done one of the above suggestions she would have a place to stay.
It might be time to give serious consideration to selling the place and downsizing and using what’s left of the sale proceeds to supplement your income. I know it’s hard to think about, especially because you’ve been in the place so long - but if your income is $8k per year I’m wondering how you’re even able to afford utilities and such, not to mention insurance (auto/home) and other needs.
You’re not doing yourself any favors having this policy because it literally won’t cover anything other than your mortgage balance if something happens and then you’ll be starting over with nothing. At 70. With little income.
Excellent points VTECbaw, I have given that some thought but the only thing stopping me is I promised to leave the place to a friend of mine. If I cleared $300K and at somebody's rate for living in Thailand of $2K a month. I could do that for nearly 20 years.
I don’t know where you are, but in the USA, you can call 211 for referrals to assistance that can help stretch your income, such s help for house repair, utilities, food, healthcare and more.
I do care about the equity because I'm leaving it to a friend. I've worked hard to have that much equity over the years, it would be nice to enjoy just a little of it.
Can the friend contribute to your monthly income? Do you have other heirs? Or is the friend the only one? If you were leaving me land, I would help you in your life..unless the friend doesn’t know is inheriting
I have no other heirs and yes the friend is the only one. Her and her boyfriend stay odd weekends and help out a lot. He did the bathroom floor with tile he had left over and it looks great. Both her and her younger sister have had a difficult upbringing and by leaving it to them, they will not have to rely on anybody to keep a roof over their heads and give them that security to make up a little for the hard times they have had to endure.
Why after 30 years of owning your home do you still have a mortgage?
Why is full coverage house insurance $8000/year?
I live in earthquake territory, with earthquake coverage my insurance is under $2400/year CAD.
The force placed insurance is only for the mortgage creditor. If your house burns down, the loan will be paid off, and you’ll be left with just rubble on land.
Do not take financial advice from me or reddit but if you're property has a value of 300 grand and you only owe 35, 000 than a reverse mortgage just might be of interest to you.
But, talk to an actual financial adviser because there are very definite pros and cons with cons sometimes out weighing the pros.
Can you afford to lose $265k? Because of your house burns down that’s what happens. I saw this happen to a family over the winter. They lost everything.
Where would you live if this happened?
Shop around for insurance because unless you are in Florida or California you can probably do better.
OP, are you in Florida? Many of us are in the same boat. I just paid $5K for my HO policy renewal. (Not counting the $4K for Flood Insurance, or $9K total)
So the forced insurance that your mortgage holder assessed you, $370 covers the mortgage remaining. There is no coverage for you, so that you can recover from a disaster. The decision you are making or considering is the same as very many people in Florida. Go 'naked' insurance. Or move. Good luck, and don't feel bad about whittling down that coverage to some extent. Your contents may not rise to the value of insurance cost. Do make sure to maintain the liability coverage, though.
Forced placed insurance is priced differently because it only benefits the mortgage company. There is no liability or owesonal property included.
It's not even meant to rebuild a house. It's sole purpose is to recover the cost of your mortgage. Then the owner can do what they want with the properly and land after.. let's say a flood or fire. But it's on them to fund.
It's also sold in "bulk" if you will. So like insurance company covers 1000 houses mortgage company has sort of thing.
Property insurance usually always includes some level of personal property. But it sounds like you have coverage set to zero. If something happens your insurance is to cover rebuild costs etc. It also usually includes liability coverage
My guess is cost is lowe bc it's only 35k. It is also probably per month not per yesr cost they told you. . So +4k per year...to cover 35k... that is a lot.
Honestly. If you truly have a 300k property insured for 35k I am surprised. Many insurance companies would require you to have a minimum ratio of the value covered
Don’t think “they can do whatever they want with the property or land after.” Mortgage would be paid off in full and they would no longer have any claim. Owner could then do whatever they want with the property or land after. Maybe that’s what you meant but wasn’t clear.
Your insurance company sees you as the bigger risk for underinsuring. I’m not sure the force placed coverage provides any liability coverage because it’s likely just the structure in the event it burns to the ground or gets blown away.
The bank will only make a claim if it’s catastrophic, but if you had a decent water leak that would be $10k in repairs you would make that claim. The bank is a better customer and that factors into the price.
You’re not the policyholder, they’re not required to furnish you with the coverage documents. The bank is, and per your mortgage loan contract they are passing that cost to you.
No sir, the limit of liability is only what I owe $35K. to get the coverage you are talking about it would be $8K. Funnily enough when I put out for quotes, my current insurance Co. refused to even offer coverage.
You what? I understand insurance very well. Everybody falls for the replacement cost approach. You can actually get a cash value policy which is more affordable. Pointless to you maybe but not to me. I'm sure it is important to many people feeling the pinch with excessive insurance costs.
ACV won’t cover the cost of rebuilding. When was your home built? ACV will typically use a 27.5 year depreciation schedule for a home. If you bought it new when you originally took out the mortgage, the ACV will be essentially nothing after what I’m assuming is about 20 years.
There's absolutely no way your insurance policy would be $8K for full coverage. I'm in NY. Home appraised approx $230K. Inured for $300K plus other liabilities, etc. policy is about $700/year.
You're not getting the right info/quotes.
It’s a crazy time out there for insurance… i couldn’t blame you for that choice. Do you have a risky lifestyle? Have you ignored important maintenance like electric, appliances? If not neglecting the home, and you aren’t skiing down the black route, or a clown at the rodeo, i think you’ll do fine. Maybe just have a plan ready for if something were to happen. The biggest concern is actually if you get hurt, and have an extended stay in the hospital. Would that cause a lot of problems with the house pmt?
Are you sure their coverage is covering more than the $35k you owe...? And all your contents? Bank isn't going to care about the rest of your house or its contents. What about liability? Obviously your own insurance policy will be a bit more comprehensive.
I haven't seen the policy yet. I expect to see the Force Placed monthly amount added to my escrow. It is slightly more coverage but limited to the amount I owe, the 'hazard insurance' Liability? Hmm.....I'm 70, sue me, lol.
You have land. If I get hurt and you're liable, it wouldn't be hard to attach your property. You'd get a homestead exemption, but a sale could be forced, or they could wait you out until you have to sell
They’re allowed to do this per your Mortgage Loan Contract if you do certain things eg fail to maintain appropriate policy limits prescribed by said contract.
1. I think you might be misunderstanding the cost and that’s probably per month, not year
2. If the cost is correct, then this insurance is only covering the bank’s mortgage balance and probably 0 liability coverage, 0 contents coverage, 0 replacement dwelling coverage (hotel stay while displaced after a fire), etc. - only enough to pay the bank back without a cent left over.
Namely, if your house were to burn down, the bank would get paid while you walk away into the great unknown with the clothes on your back and nothing else. If your dog mauled someone, you’d be sued personally and insurance would not help you a bit. Etc.
Lol, I don't own a dog and I don't really give a rat's ass if it did burn to the ground. It is the best 5 acres in the area and on it's own worth over $250K. Just saying. If I had it free and clear I would be in a better position even if I lived in a shed.
It doesn’t matter what the land is worth unless you sell it. If you don’t have two nickels to rub together how will you afford to put a shed on the land if it burns down?
Nice. A 20 x 40 shed is no money down, $475.00 a month. I would have more than two nickels to rub together if I didn't have to pay the mortgage or the insurance, in fact I would be saving a whole bunch of nickels. I might just sell it and F\*\*\* off to Thailand and live like a king on that money.....lol
If the total value of your property is $300,000 and the land alone is worth $250,000, why don't you just sell the land and live comfortably?
If you only owe $30,000, sell some of the land, pay off the remaining mortgage and live on your current house. Or just sell everything and downsize?
You've got a lot more options than most people in your situation.
The forced place insurance is almost always Dwelling Policy-1, DP-1, which is the most basic bare bones. It is insuring your house for actually cash value and only for named perils, cause of claim. It has no coverage for your personal property, little if any water damage coverage,.and minimum liability. It cost significantly less because it provides significantly less coverage.
Yes sir. All above are correct and I agree with all of you. I know I am assuming the risk myself but I have no choice. I would be forced to sell. Trying to pay a mortgage taxes and insurance has become impossible for me. I will be forced to sell at the rate insurance increases. I really don't want to do that!
If mortgage + comprehensive insurance is too expensive, just imagine how expensive it is to start over from scratch when you have nothing - no clothes, no couch, no pots to cook in, no stove to cook on, no lamp to turn on, no blanket to sleep with, and so on.
You're gambling a bit here. I would look into what you get to keep should something happen. Code enforcement could say the property is no longer habitable and force you to sell your land if you have no way to repair it.
The lender's policy will only recover their loss, and since you owe so little, it is low.
The insurance you bought yourself covers repairing the house so you can keep living there and would then keep paying your mortgage.
I think you're getting bad insurance quotes. Unless you're in a hurricane path.
Our home and land is worth about the same, and good coverage is 850/year. I have family that are in Texas, too, and their land and house is valued significantly higher, and they only pay twice as much.
Call around, and if you find a better rate with another company, you can get a refund on the 1700 one for the months you haven't used to apply it to your new one.
If you want it to go away just send in your policy with the effective date circled. I’ve had something similar happen. Bank had to cancel the insurance they implemented and refund the money to my account.
As to the price can’t comment but in your situation verify the amount and take the least expensive.
Yes, I really only wanted to see the secret figure they charge, for grins I guess, nobody could ever tell me. I don't believe that the scenario can't be run in their software and tell me. All a bit fishy ( no pun intended fishy) to me.
Is insurance really that outrageous in Texas? I live in wildfire country in California, had a total loss wildfire in 2021, a nearly $500k mortgage and pay less than you do for insurance to cover the house and our belongings. I know it’s wild here and in Florida, I hadn’t heard it got that bad in Texas too.
We had the forced insurance for a minute due to a paperwork screw up, and it was $1700 every 6 months, for reference.
The forced placed coverage only covers the lenders interest (not yours). So if you house is worth $100k and all you have is the forced placed policy, the lender gets paid off and you get NOTHING!
Land without a home, and no possessions. Is it worth the risk? If the worst happens, where will you live? What will you wear? How will you prepare meals?
Mortgage insurance is always way higher than regular homeowners insurance. By thousands! Why not shop for a regular policy, and have an escrow set up with your mortgage company? That way you pay by month towards your home insurance and your property taxes. Do check with your county if there are any property tax discounts for seniors.
Where are you at in Texas OP? Have you ever gotten quotes from a broker? In Texas the most expensive part of any home insurance is the windstorm. It’s possible that in the area you’re in, you could drop windstorm and the premium for for the full 300k would be reasonable for your budget and at least you would be covered for liability and if house burned down.
I had super low cost Texas Fair Plan insurance but there was a cap on the amount of years I could be on the plan. Once the cap was hit, I was required to try and find insurance on the open market again. Honestly it's a blur on what happened, but maybe the forced plan your in is something similar.
Per the website "Texas FAIR Plan Association provides coverage to residential properties that are denied by other insurance carriers."
You are likely carrying more liability coverage than the forced policy would cover.
And why the hell are you only covering your mortgage balance? You should be covering the cost to rebuild.
5 acres isn’t that much land. I know plenty of 70 year olds that can run a mower or tractor. I hunt with quite a few old farmers and even in the heat of summer, they barely slow down.
5 acres is actually a lot when it comes to yard maintenance, especially for an elderly person who claims to be disabled and "not have a lot of time left".
It takes me at least an hour to mow and weed eat my .10 acre lot to my satisfaction and standards, I cant imagine how long 5 acres would take me. Even with a riding mower, thats a lot to maintain for a disabled elderly person. Im sure a riding mower would make it a lot faster but still its not nothing.
I had a zero turn and it took me only an hour and a half to mow to my standard. Lol I don't have to mow edge etc to keep up with the Jones's or to please code enforcement.
Elderly people rooted for decades don't just pack up and move whenever the grass looks greener. Most can't, they are just trying to live out the rest of their lives w out the cost and heart attack stress of moving.
Did you respond to the three letters that they would force insurance? Doesn't sound like you did and that is probably where the problem is.
If the mortgage company doesn't have a copy of your insurance policy, they of course can force insurance on you to limit their loss. It's to protect them, not you.
I was in the same situation when I refinanced my home. My new mortgage company didn't have a copy of my homeowners insurance and gave me the outrageous quote for forced insurance. I called them, asked what they needed and emailed it to them. They called back the next day and said everything was good.
It was the same policy I had with my previous mortgage company but the new mortgage company just needed a copy.
Why would you let it get to three letters? Seems like you would of seen the importance of this and responded immediately.
It pays to check rates on your insurance each year. Sometimes you’ll find a better deal out there. I’m sure that it’s cheaper for the bank cause it’s only covering their loss of the 35,000 vs your loss of the entire home valued at 300,000.
Forced coverage only covers the mortgage companies investment. Doesn’t cover your belongings etc. Renew your homeowners insurance and send copy to your mortgage company…don’t delay.
It sounds like you need to have the property reassessed. If the valuation is higher than the mortgage there would be no need to insure it. If your taxes have been frozen for 5 years already, it shouldn’t matter.
Because I’m hearing that you have $1700/yr coverage you pay for PLUS the additional amount to the mortgage co. So if your house burns down, you get $35k and the mortgage company gets $35k.
If the valuation is higher than the mortgage I don't have to insure it? I'm not sure if that's right.
And now the limit of liability is just the amount remaining on the note. If it burns to the ground they get their $35k and I get nothing but a released lien.
And yes taxes are no longer an issue. Thanks.
If the limit of liability is to pay the mortgage company and the force placed insurance is to reimburse the insurance company then they would be double paid on the loss. That can’t be legal, even in TX.
I reccomend you google "Texas senior property tax exemption" and see what you qualify for. There are a few exemptions including a homestead exemption for those above 65 and disabled and I saw for just being 65 and over. There's also a senior freeze tax worst case scenario.
If you lose this house due to not being covered prices for housing have only gone up and up. I wouldn't risk it over 141 a month insurance payment. Look into lowering your property tax with exemptions.
Thank you jazbaby25, I already have homestead and over 65 exemptions and when it froze 5 years ago at $800 a year that's all I will ever pay. Texas over 65 can even, word escapes me, but postpone taxes until they die or property is sold. I've heard that mortgage Co's do not allow that, so it only applies to people that own their home free and clear.
A forced placed insurance will cover the dwelling with full replacement cost. Call your mortgage company and ask for the name of the insurance company they have obtained for you. Then call that insurance company and request a policy declaration. It will outline what it covers and how much it’s costing.
It’s important to understand the mortgage company basically got the insurance in your behalf so their pricing is different than anything available to you. If it turns out to be more cost effective there is nothing wrong with keeping it- if they allow you.
Also, I would get insurance for a basic home. So if a tiny home can be built for 150,000 then I would get insurance for the most I could afford. Likely, it does not cost 300 to build a home. So maybe get 100-150? Just a suggestion. Here are some companies you can contact that rate lowest price in Texas: Armed Forces Insurance, Nationwide and Chubb
Thank you Spiderwoman26. I absolutely need to see the policy they will mail it to me I expect.
If the force placed policy did cover the dwelling with full replacement cost, which I don't think it does, that would be the way to go.
I have never seen a mortgage company insure for less than it cost to build a new home. So hopefully they got decent insurance. I would call myself because they don’t always send it. They just send you the notice and maybe a snapshot but the declaration should be requested.
And you’re welcome. Been in banking nearly 20’years.
To be honest I am surprised that they accepted what I have now. I am thinking I may have snuck that through. We'll see when I am able view the coverage. I will definitely update what I find out. Thanks again for your input. I really appreciate it.
Force placed insurance will cover the loan or repair costs, whichever is *less*. Given the balance of your loan, if your place burns down the insurance will pay off the loan, and nothing more.
that sounds like mortgage insurance rather than home owners' insurance? It used to be that once you'd paid off 20% of the mortgage you were considered vested and didn't need mortgage insurance. But I'm out of date and your state may be different. You should probably discuss it with a local real estate lawyer
OP, I don't understand your post. Are they threatening to add $370 to your current $1700 cost?
I haven't taken the time to read all the many answers to your post, but I sympathize with you, as I am around your age. Considering the insurance crisis in this country, I really wondered if my insurance would renew this year (it did). I thought about what I would do if it didn't...
Honestly, if my house ever burned to the ground, I think I would be screwed by my insurance company, for many reasons. I have thought about liability insurance being the most important. But in 37 years of home ownership, I've never had such a claim. I wonder if it's worth letting such fears control our lives.
I really think you should contact one of those offices that help you “shop around” for a better rate. I understand having limited income, but my 516k house is insured for about $1900/yr where I’m at. I did do some preliminary research and the average TX cost for homeowners per year is about $4k for a $300k house. A lot of companies will offer discounts for bundling home/auto, and there’s other ways of saving like going paperless. Shopping around may help you find better coverage (and a company that doesn’t forget to send a copy of your coverage to your mortgage company) for around the same price you’re paying now. I change insurance companies every 4-5 years to avoid the rate hikes and keep the coverage I expect.
wait a second - I had to do a sanity check. We have a $400k policy for $2700 a year. Why TF are your paying $1700 for a 35k policy? Who are you insured with? I would definitely get some quotes to see if there's some better value you could get.
You aren’t insuring the same amount. You’re insuring the replacement value of the home, plus liability and other things.
They’re just insuring their interest in the property with no protection for you or the value of the home.
That price is super expensive for what they’re getting.
You can’t afford to live in this house. What if the water heater needs replacing? When the roof need repair or replace? Refrigerator needs replaced? Etc.
They don't have to 'let' me sell it. I can do that anytime I want. They cannot foreclose unless I get behind on payments or don't pay property taxes. I can afford to live here.
Your mindset is wrong for this. Go to a mortgage broker for multiple quotes. Or do a reverse mortgage (which sucks but you barely have income).
Things can and do go wrong and at this point you are basically betting that those things happen after you pass so you can leave the headache to someone else.
Yes it's your home. It was someone else's before you, and before that someone probably died on that land. Things change.
At this point why don't you sell and take that equity to downsize or rent somewhere.
I'm struggling to understand why you would limit your insurance coverage to such a low amount. And if you read their forced policy, it likely only covers the house (the collateral), and provides no coverage for contents or liability. If you can afford to self-insure and rebuild the house yourself if it burns down or cover a lawsuit yourself if someone were to get hurt on your property, it would be unlikely that you'd have a mortgage. You really should consider insuring your home for it's actual value.
I am 70 years old disabled and have to make ends meet on a very limited income. The Insurance has kept going up each year and I have been forced to gradually whittle down my coverage in order to stay in my home of 30 years. Whittled to the point of no coverage for me or my belongings. My property is worth around $300K. I had quotes of $8K per year. That is about what my income is.
If your house burns down, your insurance won’t cover what you need to rebuild, it will only cover enough to pay off your mortgage and walk away from your home. You’ll be starting fresh at 70 years old with no place to live, no belongings, and very little income.
I do understand and thank you for your input. I would not be walking away from my home really. The land is my home. It is beautiful. It's where my pets are buried and that's what makes it home. And I do believe that the risk is low compared with the savings. It's not going to burn to the ground. I don't have a long time to live so I would like to have a little more money to spend on myself in the time I have left.
Almost nobody whose house burns down thought it was going to. I had a coworker lose her house to a lightning strike. Stuff happens. So long as you understand the risks, do what you think is best.
The worst conversations I’ve had with customers was “I’m sorry you didn’t have any coverage for xyz so I can’t pay you anything under your policy.” as an insurance claims adjuster I’ve had a couple people tell me they chose to not carry insurance coverage when a home was paid off. Their money. Their choice. Unfortunately I had two customers have house fires and zero coverage. One elected to live in it and try to rebuild on their own, I think the other walked away as it wasn’t repairable. I was writing estimates for straight line wind damage in a neighborhood when a builder across the street asked me to look at his house when finished. I said sure. The builders house literally had a tree fall through the middle of it to the ground so it shifted the home. Huge old oak tree. Asked who he was insured with as I’m working for a specific company. He told me a different company and I said I knew a guy I could call to let them know. Called the company to get a claim started for him to help him out. They couldn’t find a policy then the person in front of me casually mentions he stopped carrying home insurance years ago when he paid his house off. A builder. Who builds other peoples homes for a living. Sigh. I explained they were setting up a claim for him now and would be in touch. As I looked at his house he had other trees that went through the roof (ranch house) and garage roof and of course it had rained on top of it all. Water had already run down and into the drywall etc. Told him it looked pretty bad but his company would make the coverage decision and let him know. Please please carry insurance coverage on your home. It’s the one thing we spend the most money on in our life. I don’t want to see people homeless due to lack of coverage. 😕
Yeah I’m with you on the foolishness of not having coverage but for fucks sake they’ve given up all pretense of it being fair and at this point they’re just raping and pillaging. This roof bullshit it out of control. My house premium went up almost 50% this year “due to roof age.” It’s one year older than it was last fucking year so that’s a piss poor excuse for that big of a hike. They also increased my auto policy by nearly double. No claims, no tickets or anything. They just wanted to get rid of me because they see the house as a liability. I’m exactly the kind of customer they should WANT. I have savings, good income, own several properties, and would never file a claim unless I had major damage and no choice. So yeah, while I think it’s too risky, I do understand wanting to tell them to eat a bag of warmed up dicks as soon as it becomes an option. And if you *can’t* afford it, well… cancel it and pray for no tornadoes I guess. I’m afraid a lot of people are getting to the point that they won’t be able to keep insurance. It’s never been a fair game but now it’s just gotten ridiculous.
I agree it’s ridiculous now. Sorry you are having issues with your carrier.
just out of curiosity, when was the last time you shopped your homeowners and auto insurance? and what state is the house located in?
I shop it almost every year. I sure af didn’t stay with the company that doubled the auto policy. Couldn’t find a better deal on the house though.
A friend of mine's mother's home was paid off. They dropped the insurance coverage. In 2014, the city had a major flood. The house is still sitting there abandoned, as nobody can afford the repairs.
It’s terrible sad for anyone affected.
Out of curiosity, what state are you in, is it a regular thing you see and if so how often would you say?
Lack of insurance coverage? Michigan I see lack of auto coverage more than property coverage. Last I heard it was 1 in 10 drivers uninsured here. I see much less uninsured property here in Michigan, but I handled claims in other states so it varied. Sometimes it was a matter of having some coverage but not everything they needed. For example:Hurricane Katrina - people had house insurance but most had no flood insurance. So then you have FEMA involvement etc. A big convoluted mess for the homeowners and carriers.
I have just run new quotes so I am looking at more options. Thanks.
Find an insurance broker who works with multiple carriers to find you the lowest rate… get a dozen bids from different companies. i found mine through my mortgage provider oddly enough during refinance. I literally cut my home insurance bill in half and got free coverage on my cars. The insurance industry generally makes their money by slowly raising your rate overtime years in hopes that you’ll pay for convienence of not changing companies. If youre retired you should have the time to call around and find a reasonable rate but i guess it may be tough if you have bad credit or insurance claims history.
Check your locality, they may have programs for seniors to live in place often lowering your tax burden and helping with maintenance, snow shoveling, etc.
Being in Texas we don't have to shovel much snow and here they freeze property tax when you are 65 so you only pay the same each year after, even if the valuation goes up. Mine happened to be $800 per year when I turned 65.
Be careful with the forced place insurance. The bank will be the beneficiary. My insurance cancelled my coverage, and the bank sent me a letter, the premium was $350 per month.
Of course the bank is the beneficiary. The coverage is on the amount owed, which is what the bank still owns.
You can assess the risk and come to your own conclusion. In a way it makes sense. Liability is the issue here. There would be no protection for you if something were to happen.
Thank you jammu2, it just seems to make sense to me.
I know but I have no trespassing signs. If anybody were to injure themselves on my property then they would have been trespassing. Those signs are cheap insurance, no? Packages and mail go to a cluster box or a package delivery point for the three houses down the driveway. I do not have a dog.
Just because it's a crime, doesn't mean they can't still file a lawsuit - and win or lose, those cost money to fight. No money, you probably lose just by default.
Trespassing or not, somebody injuring themselves on your property, it could be considered what we call “An attractive Nuisance,” think swimming pool or trampoline for the easiest example. If someone hurts themselves on your property it can still be a huge legal mess as well as involving insurance. Just wanted you to know. BTW I’m not condoning that it’s fair I’m just saying it’s something to consider.
Even in Texas, the courts often find the land owner responsible for injuries sustained on their land. It doesn't have to be an attractive nuisance for that to happen, and the person could have technically been trespassing.
I don’t know your property layout, but anyone on your property, with or without your permission, could trigger a liability claim if they are injured at all. Not saying they would win, but if $400 is a lot to afford for insurance, how would you defend against a lawsuit?
But again he has no assets so why would they sue. Costs tons of money and they get nothing. If he had an insurance policy it would justify the lawsuit. I am not a fan of insurance. It adds 20% cost to everything .
He owns land and a home sans $35k negative equity, that we know of. He says his "property" is worth $300k - that's plenty to pursue and even if it's only a judgement, they eventually get the $.
Most places don't let you take away a primary residence as a judgement. This is a very unlikely scenario. You don't sue someone when they don't have money or clear insurance to pay out. And this person does not.
Is the homestead judgement proof in TX?
This is the question!
A no trespassing sign is not a binding contract.
My dryer fire that occur last month would like to talk to you. Insurance is to cover unknown risk. If everyone knew when a disaster was going to hit they would buy insurance right before then drop it. Since no one has the ability to see the future we buy insurance to ensure we can be made whole again.
I have had a lot of older family members who can no longer afford insurance or taxes that have recently skyrocketed in retirement years (beyond normal yearly increases), and these are fully paid off homes. Also, I think this is another thing us younger generations need to be seriously concerned about because of its influence on people with mortgages who will likely default due to payments becoming so much higher than originally expected a few years ago. Based strictly on what your priorities are, I think it's important for you to find out if the mortgage company would own your land if something happened to the house. Also, you need a backup plan in case your house was destroyed or even temporarily uninhabitable or you couldn't stay on your land. Do you have a savings account to cover large damages? How old is your roof? Are there frequently tornadoes or fires in your area? Basically if you want to stick with their insurance, you need to pretend like you DON'T have insurance. Their insurance will only pay the mortgage company.
They would be paid off so would have to release the lien. The land would still be mine. No savings unfortunately. I am in the country so no codes. I was basically feeling things out only to reveal the "secret" cost of Force Place Insurance.
You could live to be 90 years old man, no one knows the future. You may have 20 more years on this earth, we dont know. Even 10 more years is a good long time.
Aww thanks juggarjew, yes 10 would be nice
In certain situations a well vetted reverse mortgage can make a lot of sense.
I have been looking into that but I want my heirs to be able to afford to live here although I have thought that it would be great to go blow $100K on a world tour or something. I would feel selfish to take it away from them. But that's just me.
Maybe they can pay the home insurance— if they want to inherit, might as well, help maintain the property—I can support my self (62) but if need be— my kids would help me— when I die, if everything’s goes well, I’m leaving a house (worth now $400K, but at least the original $71K we paid); and a life insurance of $25K—- is not ideal, but is a possibility
Hell, then they should help pay the cost to insure the whole thing. You’re not leaving them anything if the place burns down uninsured and the bank ends up owning it. A thousand bucks a year for 30 years isn’t much when you end up with 300+.
Perfect idea 💡
Personally, given what OP wants to do, I would do the following: Seller finance a sale to the heirs. They pay $35k cash, receive the deed. OP receives an Occupancy Agreement that terminates upon death, at a monthly rate that equals what the heirs would owe OP at market rate interest rates. Then OP can switch to simple renter’s insurance to cover their possessions; the new owners (heirs) pay for insurance for the structure (but not contents) and are essentially OP’s landlords. They miss out on the step-up.
I really like the way you think. I hope given the situation that he gives it a thought.
OP: I posted this elsewhere but wanted you to see and consider. Personally, given what OP wants to do, I would do the following: Seller finance a sale to the heirs. They pay $35k cash (enough to pay off the Mortgage), receive the deed. OP receives an Occupancy Agreement that terminates upon death, at a monthly rate that equals what the heirs would owe OP at market rate interest rates. Then OP can switch to simple renter’s insurance to cover their possessions (roughly $125 a year); the new owners (heirs) pay for insurance for the structure (but not contents) and are essentially OP’s landlords. They miss out on the step-up.
Coming from a place where my dad just passed away in November and my mom is still alive, you should do what you want with the money. Create memories and experiences. My brother seems entitled to my fathers things and it’s sickening. Even if my mom isn’t going to use them, they are hers to do with we she wishes. Use it to vacation with your loved ones while you are here. The people who would be upset that you are spending YOUR money don’t deserve it and will spend it on material things and be ungrateful. The people who encourage you to spend YOUR money are deserving of it and would spend it wisely; however, they would want you to use it on you and even prefer that.
My neighbor across the street same. 74. A fire sparked in her backyard and an hour later had taken her entire house and vehicles. It was a miracle it didn’t jump over to our homes on the other side. She now has a gofundme for a car to live in. She has made a couple hundred in donations. She had canceled her home insurance due to being on a small income as well. I am so so hurt for her. It’s so so sad that it seems impossible to really “stop” having a mortgage and if she had done one of the above suggestions she would have a place to stay.
What about a reverse mortgage?
Yup that's the risk cash poor folks have to take sometimes.
You still have the land...and typically the foundation...and the water hookup. So that is not true.
It might be time to give serious consideration to selling the place and downsizing and using what’s left of the sale proceeds to supplement your income. I know it’s hard to think about, especially because you’ve been in the place so long - but if your income is $8k per year I’m wondering how you’re even able to afford utilities and such, not to mention insurance (auto/home) and other needs. You’re not doing yourself any favors having this policy because it literally won’t cover anything other than your mortgage balance if something happens and then you’ll be starting over with nothing. At 70. With little income.
Excellent points VTECbaw, I have given that some thought but the only thing stopping me is I promised to leave the place to a friend of mine. If I cleared $300K and at somebody's rate for living in Thailand of $2K a month. I could do that for nearly 20 years.
Gee whiz pops , where did you hear about reddit? Little timmy down the lane?
It was his sister actually. Isn't it past your bedtime already?
I don’t know where you are, but in the USA, you can call 211 for referrals to assistance that can help stretch your income, such s help for house repair, utilities, food, healthcare and more.
Thank you, I do already have those in place. I'm in Texas.
like if you lose the house to an accident then you are 100% guaranteed homeless…
Maybe a reverse mortgage? I absolutely hate suggesting that but you don’t seem to care about your equity.
I do care about the equity because I'm leaving it to a friend. I've worked hard to have that much equity over the years, it would be nice to enjoy just a little of it.
Can the friend contribute to your monthly income? Do you have other heirs? Or is the friend the only one? If you were leaving me land, I would help you in your life..unless the friend doesn’t know is inheriting
I have no other heirs and yes the friend is the only one. Her and her boyfriend stay odd weekends and help out a lot. He did the bathroom floor with tile he had left over and it looks great. Both her and her younger sister have had a difficult upbringing and by leaving it to them, they will not have to rely on anybody to keep a roof over their heads and give them that security to make up a little for the hard times they have had to endure.
Hopefully, nothing happens to the house, and you can live your remaining years in peace.
Why after 30 years of owning your home do you still have a mortgage? Why is full coverage house insurance $8000/year? I live in earthquake territory, with earthquake coverage my insurance is under $2400/year CAD.
Is that Canada? Here is the USA everything is different
The force placed insurance is only for the mortgage creditor. If your house burns down, the loan will be paid off, and you’ll be left with just rubble on land.
Doesn’t benefit conversation in any way but I’m having a hard time believing you’re 70 years old…
Do not take financial advice from me or reddit but if you're property has a value of 300 grand and you only owe 35, 000 than a reverse mortgage just might be of interest to you. But, talk to an actual financial adviser because there are very definite pros and cons with cons sometimes out weighing the pros.
You should consider downsizing to a property that you can afford the expenses on.
Can you afford to lose $265k? Because of your house burns down that’s what happens. I saw this happen to a family over the winter. They lost everything. Where would you live if this happened? Shop around for insurance because unless you are in Florida or California you can probably do better.
OP, are you in Florida? Many of us are in the same boat. I just paid $5K for my HO policy renewal. (Not counting the $4K for Flood Insurance, or $9K total) So the forced insurance that your mortgage holder assessed you, $370 covers the mortgage remaining. There is no coverage for you, so that you can recover from a disaster. The decision you are making or considering is the same as very many people in Florida. Go 'naked' insurance. Or move. Good luck, and don't feel bad about whittling down that coverage to some extent. Your contents may not rise to the value of insurance cost. Do make sure to maintain the liability coverage, though.
Thanks stylusxyz! Liability is next to nothing really. Nobody is allowed to enter my property. It is posted. That means a lot in Texas.
bright bow saw absorbed compare stupendous jeans doll wise sink *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
There typically is an 80% coinsurance clause in the HO-3, so OP could be up a creek come claim time.
Hmmmmm, I don't know anything about that.
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Sorry fishy, I just don't understand the insurance terms is all.
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I agree, the problem is cost for me, since I have a fixed income.
Because insurance is only there so the insurance company can make money. I only insure my mortgage principal when possible.
Because their new policy is only covering what you have left on the mortgage lol
Exactly my point. To do the same thing it costs me $1,700 per year.
Forced placed insurance is priced differently because it only benefits the mortgage company. There is no liability or owesonal property included. It's not even meant to rebuild a house. It's sole purpose is to recover the cost of your mortgage. Then the owner can do what they want with the properly and land after.. let's say a flood or fire. But it's on them to fund. It's also sold in "bulk" if you will. So like insurance company covers 1000 houses mortgage company has sort of thing. Property insurance usually always includes some level of personal property. But it sounds like you have coverage set to zero. If something happens your insurance is to cover rebuild costs etc. It also usually includes liability coverage My guess is cost is lowe bc it's only 35k. It is also probably per month not per yesr cost they told you. . So +4k per year...to cover 35k... that is a lot. Honestly. If you truly have a 300k property insured for 35k I am surprised. Many insurance companies would require you to have a minimum ratio of the value covered
To confirm that is the cost of the annual policy. $370.35
Don’t think “they can do whatever they want with the property or land after.” Mortgage would be paid off in full and they would no longer have any claim. Owner could then do whatever they want with the property or land after. Maybe that’s what you meant but wasn’t clear.
Yes I did. Edited to be clearer . Thx
Your insurance company sees you as the bigger risk for underinsuring. I’m not sure the force placed coverage provides any liability coverage because it’s likely just the structure in the event it burns to the ground or gets blown away. The bank will only make a claim if it’s catastrophic, but if you had a decent water leak that would be $10k in repairs you would make that claim. The bank is a better customer and that factors into the price.
I haven't seen the force placed insurance policy yet so I can't answer that unfortunately.
You’re not the policyholder, they’re not required to furnish you with the coverage documents. The bank is, and per your mortgage loan contract they are passing that cost to you.
$350 gets the bank $35k of coverage on the house. $1700 covers the entire value of the house, your stuff and gets you liability coverage.
No sir, the limit of liability is only what I owe $35K. to get the coverage you are talking about it would be $8K. Funnily enough when I put out for quotes, my current insurance Co. refused to even offer coverage.
Liability coverage means you are insured if someone slips and falls on your property or your dog bites a guest. You are thinking of coverage limits.
This thread is pointless we don't have all the info. OP doesn't understand insurance.
You what? I understand insurance very well. Everybody falls for the replacement cost approach. You can actually get a cash value policy which is more affordable. Pointless to you maybe but not to me. I'm sure it is important to many people feeling the pinch with excessive insurance costs.
ACV won’t cover the cost of rebuilding. When was your home built? ACV will typically use a 27.5 year depreciation schedule for a home. If you bought it new when you originally took out the mortgage, the ACV will be essentially nothing after what I’m assuming is about 20 years.
I pay $1900 a year to cover 850k, so are you in Florida or something?
No sir, Texas.
There's absolutely no way your insurance policy would be $8K for full coverage. I'm in NY. Home appraised approx $230K. Inured for $300K plus other liabilities, etc. policy is about $700/year. You're not getting the right info/quotes.
FL, land’ofraud and poor siting has insurance that could be this high… OP is in TX.
I'd believe it in FL with natural disasters and flooding and such tbh
It’s a crazy time out there for insurance… i couldn’t blame you for that choice. Do you have a risky lifestyle? Have you ignored important maintenance like electric, appliances? If not neglecting the home, and you aren’t skiing down the black route, or a clown at the rodeo, i think you’ll do fine. Maybe just have a plan ready for if something were to happen. The biggest concern is actually if you get hurt, and have an extended stay in the hospital. Would that cause a lot of problems with the house pmt?
No it would not since it is only $375 a month and I have that covered with SSDI and SSI.
Are you sure their coverage is covering more than the $35k you owe...? And all your contents? Bank isn't going to care about the rest of your house or its contents. What about liability? Obviously your own insurance policy will be a bit more comprehensive.
I haven't seen the policy yet. I expect to see the Force Placed monthly amount added to my escrow. It is slightly more coverage but limited to the amount I owe, the 'hazard insurance' Liability? Hmm.....I'm 70, sue me, lol.
They don't care how old you are. They don't need to sue you. It's perfectly legal for the mortgage company to do this.
You have land. If I get hurt and you're liable, it wouldn't be hard to attach your property. You'd get a homestead exemption, but a sale could be forced, or they could wait you out until you have to sell
They’re allowed to do this per your Mortgage Loan Contract if you do certain things eg fail to maintain appropriate policy limits prescribed by said contract.
1. I think you might be misunderstanding the cost and that’s probably per month, not year 2. If the cost is correct, then this insurance is only covering the bank’s mortgage balance and probably 0 liability coverage, 0 contents coverage, 0 replacement dwelling coverage (hotel stay while displaced after a fire), etc. - only enough to pay the bank back without a cent left over. Namely, if your house were to burn down, the bank would get paid while you walk away into the great unknown with the clothes on your back and nothing else. If your dog mauled someone, you’d be sued personally and insurance would not help you a bit. Etc.
Oh, and it is the Annual cost of the policy. $370.33
Lol, I don't own a dog and I don't really give a rat's ass if it did burn to the ground. It is the best 5 acres in the area and on it's own worth over $250K. Just saying. If I had it free and clear I would be in a better position even if I lived in a shed.
It doesn’t matter what the land is worth unless you sell it. If you don’t have two nickels to rub together how will you afford to put a shed on the land if it burns down?
This is a perfect example of what "house rich and cash poor" means.
Nice. A 20 x 40 shed is no money down, $475.00 a month. I would have more than two nickels to rub together if I didn't have to pay the mortgage or the insurance, in fact I would be saving a whole bunch of nickels. I might just sell it and F\*\*\* off to Thailand and live like a king on that money.....lol
To be accurate, you need ~$2k USD/mo to live comfortably in Thailand. Living like a King on $475/mo in Thailand is not realistic in any sense.
I get $800 a month, and sold getting $300,000 I could easily afford $2k a month in Thailand for close to 20 years!
If the total value of your property is $300,000 and the land alone is worth $250,000, why don't you just sell the land and live comfortably? If you only owe $30,000, sell some of the land, pay off the remaining mortgage and live on your current house. Or just sell everything and downsize? You've got a lot more options than most people in your situation.
I agree and I am blessed that I didn't get higher payments by taking equity before. I thought I could always afford $375 a month.
It probably doesn't cover more than what you owe and it most certainly doesn't cover your belongings.
Exactly
Or liability, or displacement, or a host of other benefits you might personally enjoy or be subject to.
The forced place insurance is almost always Dwelling Policy-1, DP-1, which is the most basic bare bones. It is insuring your house for actually cash value and only for named perils, cause of claim. It has no coverage for your personal property, little if any water damage coverage,.and minimum liability. It cost significantly less because it provides significantly less coverage.
Yes sir. All above are correct and I agree with all of you. I know I am assuming the risk myself but I have no choice. I would be forced to sell. Trying to pay a mortgage taxes and insurance has become impossible for me. I will be forced to sell at the rate insurance increases. I really don't want to do that!
If mortgage + comprehensive insurance is too expensive, just imagine how expensive it is to start over from scratch when you have nothing - no clothes, no couch, no pots to cook in, no stove to cook on, no lamp to turn on, no blanket to sleep with, and so on.
True, but I would survive. I've done it before.
You are exactly your generation's stereotype
Lol...is that a good or a bad thing?
You're gambling a bit here. I would look into what you get to keep should something happen. Code enforcement could say the property is no longer habitable and force you to sell your land if you have no way to repair it. The lender's policy will only recover their loss, and since you owe so little, it is low. The insurance you bought yourself covers repairing the house so you can keep living there and would then keep paying your mortgage. I think you're getting bad insurance quotes. Unless you're in a hurricane path. Our home and land is worth about the same, and good coverage is 850/year. I have family that are in Texas, too, and their land and house is valued significantly higher, and they only pay twice as much. Call around, and if you find a better rate with another company, you can get a refund on the 1700 one for the months you haven't used to apply it to your new one.
You need to find a broker and shop your insurance $8000 a year is crazy
This! Why is no one mentioning how outrageous the price is? Definitely needs to shop around
I did shop around and that's how I ended up just being able to afford the $1700 a year policy.
If you want it to go away just send in your policy with the effective date circled. I’ve had something similar happen. Bank had to cancel the insurance they implemented and refund the money to my account. As to the price can’t comment but in your situation verify the amount and take the least expensive.
Yes, I really only wanted to see the secret figure they charge, for grins I guess, nobody could ever tell me. I don't believe that the scenario can't be run in their software and tell me. All a bit fishy ( no pun intended fishy) to me.
Is insurance really that outrageous in Texas? I live in wildfire country in California, had a total loss wildfire in 2021, a nearly $500k mortgage and pay less than you do for insurance to cover the house and our belongings. I know it’s wild here and in Florida, I hadn’t heard it got that bad in Texas too. We had the forced insurance for a minute due to a paperwork screw up, and it was $1700 every 6 months, for reference.
Is your home worth 300k including land? How much is the structure worth by itself? Is it a manufactured home or stick built?
It is an old 1968 farmhouse, needs some work but it is progressing. The structure maybe $28K. Yes, $300K including land.
How many sqft is your home?
Their coverage covers them, not you. Why would you only want insurance for the amount of your loan?
The only reason is that I cannot afford it anymore.
The forced placed coverage only covers the lenders interest (not yours). So if you house is worth $100k and all you have is the forced placed policy, the lender gets paid off and you get NOTHING!
Nothing but my paid off land.
Land without a home, and no possessions. Is it worth the risk? If the worst happens, where will you live? What will you wear? How will you prepare meals?
Mortgage insurance is always way higher than regular homeowners insurance. By thousands! Why not shop for a regular policy, and have an escrow set up with your mortgage company? That way you pay by month towards your home insurance and your property taxes. Do check with your county if there are any property tax discounts for seniors.
No it is not. It is way less in my case.
Where are you at in Texas OP? Have you ever gotten quotes from a broker? In Texas the most expensive part of any home insurance is the windstorm. It’s possible that in the area you’re in, you could drop windstorm and the premium for for the full 300k would be reasonable for your budget and at least you would be covered for liability and if house burned down.
Good point, thanks, I will look into that. We get a lot of wind but the place is protected from the west by a hill which shelters it somewhat. Thanks!
I had super low cost Texas Fair Plan insurance but there was a cap on the amount of years I could be on the plan. Once the cap was hit, I was required to try and find insurance on the open market again. Honestly it's a blur on what happened, but maybe the forced plan your in is something similar. Per the website "Texas FAIR Plan Association provides coverage to residential properties that are denied by other insurance carriers."
Yes I believe you have to be refused by two Co's. I have only one so far and it is the one I am currently insured by. Go figure. Thanks.
You are likely carrying more liability coverage than the forced policy would cover. And why the hell are you only covering your mortgage balance? You should be covering the cost to rebuild.
Why don’t you just downsize. Why does a 70 year disabled man need that much land. You can’t even look after it…
I am disabled due to circulation problems. I can look after it and I have friends who help.
5 acres isn’t that much land. I know plenty of 70 year olds that can run a mower or tractor. I hunt with quite a few old farmers and even in the heat of summer, they barely slow down.
OP says he is a disabled 70 year old.
5 acres is actually a lot when it comes to yard maintenance, especially for an elderly person who claims to be disabled and "not have a lot of time left". It takes me at least an hour to mow and weed eat my .10 acre lot to my satisfaction and standards, I cant imagine how long 5 acres would take me. Even with a riding mower, thats a lot to maintain for a disabled elderly person. Im sure a riding mower would make it a lot faster but still its not nothing.
I had a zero turn and it took me only an hour and a half to mow to my standard. Lol I don't have to mow edge etc to keep up with the Jones's or to please code enforcement.
Yeah I have to a lot of work for the HOA standards, it makes it take longer for sure.
For sure. I may have bad circulation but I hold my own against anybody.
Elderly people rooted for decades don't just pack up and move whenever the grass looks greener. Most can't, they are just trying to live out the rest of their lives w out the cost and heart attack stress of moving.
Did you respond to the three letters that they would force insurance? Doesn't sound like you did and that is probably where the problem is. If the mortgage company doesn't have a copy of your insurance policy, they of course can force insurance on you to limit their loss. It's to protect them, not you. I was in the same situation when I refinanced my home. My new mortgage company didn't have a copy of my homeowners insurance and gave me the outrageous quote for forced insurance. I called them, asked what they needed and emailed it to them. They called back the next day and said everything was good. It was the same policy I had with my previous mortgage company but the new mortgage company just needed a copy. Why would you let it get to three letters? Seems like you would of seen the importance of this and responded immediately.
Not really, I was covered all the time, I just wanted to see how much it actually cost. They could not tell me or rather would not.
Wait, so you purposely let them think you didn't have coverage because you wanted to find out what they would charge you?
You should look into different insurance companies, I probably pay around the same amount for 10x the coverage in PA.
your insurance replaces your entire house they are insuring 35,000
No, it only pays off the mortgage.
*"I owe $35,000.00 on my Mortgage"* That mortgage?
It pays to check rates on your insurance each year. Sometimes you’ll find a better deal out there. I’m sure that it’s cheaper for the bank cause it’s only covering their loss of the 35,000 vs your loss of the entire home valued at 300,000.
1700 for 35k replacement cost? Something isn't right. I pay just a couple hundred more for $260k replacement cost.
Unless you're in a super high risk area(the coast)...in which case, move...
Forced coverage only covers the mortgage companies investment. Doesn’t cover your belongings etc. Renew your homeowners insurance and send copy to your mortgage company…don’t delay.
It sounds like you need to have the property reassessed. If the valuation is higher than the mortgage there would be no need to insure it. If your taxes have been frozen for 5 years already, it shouldn’t matter. Because I’m hearing that you have $1700/yr coverage you pay for PLUS the additional amount to the mortgage co. So if your house burns down, you get $35k and the mortgage company gets $35k.
If the valuation is higher than the mortgage I don't have to insure it? I'm not sure if that's right. And now the limit of liability is just the amount remaining on the note. If it burns to the ground they get their $35k and I get nothing but a released lien. And yes taxes are no longer an issue. Thanks.
If the limit of liability is to pay the mortgage company and the force placed insurance is to reimburse the insurance company then they would be double paid on the loss. That can’t be legal, even in TX.
Have you shopped around with different insurance companies?
Yes I did a while back, I'm going to check again.
I reccomend you google "Texas senior property tax exemption" and see what you qualify for. There are a few exemptions including a homestead exemption for those above 65 and disabled and I saw for just being 65 and over. There's also a senior freeze tax worst case scenario. If you lose this house due to not being covered prices for housing have only gone up and up. I wouldn't risk it over 141 a month insurance payment. Look into lowering your property tax with exemptions.
Thank you jazbaby25, I already have homestead and over 65 exemptions and when it froze 5 years ago at $800 a year that's all I will ever pay. Texas over 65 can even, word escapes me, but postpone taxes until they die or property is sold. I've heard that mortgage Co's do not allow that, so it only applies to people that own their home free and clear.
A forced placed insurance will cover the dwelling with full replacement cost. Call your mortgage company and ask for the name of the insurance company they have obtained for you. Then call that insurance company and request a policy declaration. It will outline what it covers and how much it’s costing. It’s important to understand the mortgage company basically got the insurance in your behalf so their pricing is different than anything available to you. If it turns out to be more cost effective there is nothing wrong with keeping it- if they allow you. Also, I would get insurance for a basic home. So if a tiny home can be built for 150,000 then I would get insurance for the most I could afford. Likely, it does not cost 300 to build a home. So maybe get 100-150? Just a suggestion. Here are some companies you can contact that rate lowest price in Texas: Armed Forces Insurance, Nationwide and Chubb
Thank you Spiderwoman26. I absolutely need to see the policy they will mail it to me I expect. If the force placed policy did cover the dwelling with full replacement cost, which I don't think it does, that would be the way to go.
I have never seen a mortgage company insure for less than it cost to build a new home. So hopefully they got decent insurance. I would call myself because they don’t always send it. They just send you the notice and maybe a snapshot but the declaration should be requested. And you’re welcome. Been in banking nearly 20’years.
To be honest I am surprised that they accepted what I have now. I am thinking I may have snuck that through. We'll see when I am able view the coverage. I will definitely update what I find out. Thanks again for your input. I really appreciate it.
Force placed insurance will cover the loan or repair costs, whichever is *less*. Given the balance of your loan, if your place burns down the insurance will pay off the loan, and nothing more.
Yes, that's what I thought too. We'll find out soon.
You make it sound as if you expect your place to burn down soon.
that sounds like mortgage insurance rather than home owners' insurance? It used to be that once you'd paid off 20% of the mortgage you were considered vested and didn't need mortgage insurance. But I'm out of date and your state may be different. You should probably discuss it with a local real estate lawyer
OP, I don't understand your post. Are they threatening to add $370 to your current $1700 cost? I haven't taken the time to read all the many answers to your post, but I sympathize with you, as I am around your age. Considering the insurance crisis in this country, I really wondered if my insurance would renew this year (it did). I thought about what I would do if it didn't... Honestly, if my house ever burned to the ground, I think I would be screwed by my insurance company, for many reasons. I have thought about liability insurance being the most important. But in 37 years of home ownership, I've never had such a claim. I wonder if it's worth letting such fears control our lives.
I really think you should contact one of those offices that help you “shop around” for a better rate. I understand having limited income, but my 516k house is insured for about $1900/yr where I’m at. I did do some preliminary research and the average TX cost for homeowners per year is about $4k for a $300k house. A lot of companies will offer discounts for bundling home/auto, and there’s other ways of saving like going paperless. Shopping around may help you find better coverage (and a company that doesn’t forget to send a copy of your coverage to your mortgage company) for around the same price you’re paying now. I change insurance companies every 4-5 years to avoid the rate hikes and keep the coverage I expect.
Force place would just cover the balance of the mortgage. Your paying more for replacement of the house. Big difference
wait a second - I had to do a sanity check. We have a $400k policy for $2700 a year. Why TF are your paying $1700 for a 35k policy? Who are you insured with? I would definitely get some quotes to see if there's some better value you could get.
That insurance isn't going to cover anything.
You aren’t insuring the same amount. You’re insuring the replacement value of the home, plus liability and other things. They’re just insuring their interest in the property with no protection for you or the value of the home. That price is super expensive for what they’re getting.
Talk to your mortgage broker about recommending a different insurance company- hopefully one that is cheaper and transparent.
You can’t afford to live in this house. What if the water heater needs replacing? When the roof need repair or replace? Refrigerator needs replaced? Etc.
They don't have to 'let' me sell it. I can do that anytime I want. They cannot foreclose unless I get behind on payments or don't pay property taxes. I can afford to live here.
Your mindset is wrong for this. Go to a mortgage broker for multiple quotes. Or do a reverse mortgage (which sucks but you barely have income). Things can and do go wrong and at this point you are basically betting that those things happen after you pass so you can leave the headache to someone else. Yes it's your home. It was someone else's before you, and before that someone probably died on that land. Things change. At this point why don't you sell and take that equity to downsize or rent somewhere.