Pay A Full Year of Homeowners Insurance Up Front?


Why Do I Pay A Full Year of Homeowners Insurance Up Front?


The third blog in a series of mortgage blogs of 10 most frequently asked questions that I am asked on a weekly basis…  Is one that is

Mortgages Cost include Paying Homeowners Insurance up front

Ask me a mortgage question about paying homeowners insurance when buying a home

related to the second blog in this seriesWhat Do You Mean I Need Money For Closing Costs”.  Yes it is important to squirrel away those funds too for homeowners insurance.

Pay A Full Year of Homeowners Insurance Up Front?FAQ #3 ……… Why Do I have To Pay For A Full Year Of Homeowners Insurance Up Front When I Am Paying For It Every Month In My Mortgage Payment?  A great home buyer question.

This is one of the shortest explanations that I give, but a very important and confusing one for especially First Time Home buyers.  It is also an explanation that I usually end up giving again after the loan is approved, and I instruct the Borrower that they now need to go and get Homeowners Insurance.  Also, that their insurance company is going to ask them for the first year’s premium of homeowners insurance up front.


Homeowners Insurance like any other insurance is paid in advance.  Therefore, at the Closing there is not any money in the escrow account to pay the first year’s premium.

A year from the Closing enough money will have been collected through each monthly mortgage payment to pay for the second year’s premium, as well as every year thereafter, but the initial annual payment will have to be paid on or before the home closing.

This is an important fact that some lenders forget to mention to their home buyers in their initial mortgage application process.

As simple as that may seem, it tends to be a major source of confusion for First Time Home buyers, and even home buyers that have been through the home buying process several times.  I would have expected the confusion to be why they need to pay taxes on a house that they have not even lived in yet, but that question oddly is rarely asked.


But I can count on giving the simple explanation above at least at the beginning of the loan process.  It may happen at the time they are instructed to obtain Homeowners Insurance, and some times even a third time when they receive the Closing documents just before the Closing.

Why Do I Pay A Full Year of Homeowners Insurance Up Front?


This blog post is courtesy of my guest blogger, George Souto.  information about my mortgage guest blogger and author follow:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut.  George can be contacted at (860) 573-1308 or


Ginny Lacey Gorman is your go to North Kingstown Real Estate agent for real estate in North Kingstown RI and beyond…knowing the geographic area, schools, happenings, important tidbits of information and businesses well.
Waterfront, oceanfront, luxury and coastal Rhode Island real estate are my specialty but all of RI is my backyard.  When you are in need of a true real estate professional for your buying, selling or relocating needs and an internet savvy marketer and agent  who sells RI houses in this real estate market call Ginny at 401.529.7849 or email me at today.