Since my homeowners insurance is part of my monthly mortgage payment in Lakewood, CO. I am confused over who decides what insurance to get. Is it my responsibility or is the decision left up to my mortgage lender?

It is quite common for your homeowners insurance to be paid by your mortgage payment. Most people who have a mortgage on their home in Lakewood, Colorado handle their insurance and tax payments by setting up an escrow account with their lender.

A mortgage payment consists of two parts. Part of your monthly payment is applied toward reducing the principal amount of your loan and the remainder is used to pay interest on the loan. In the early years of a mortgage, more of the mortgage payment is applied to interest rather than toward principal reduction.

Most people think about their monthly mortgage payment in terms of the total amount of the check they have to write. If your homeowners insurance (property taxes) is part of that monthly payment, your Colorado lender puts that aside (into escrow) so the money will be there when it comes time to pay your insurance bill. Usually, the lender makes one annual payment to your insurance company.

Your lender does not tell you when you should file a claim or if you should buy a policy that provides extra coverage for your personal property. They are concerned with your dwelling and the other structures that, if damaged and not repaired, could result in a reduction of the value of the home that they hold the title to until the mortgage is satisfied.

Your lender may specify in your mortgage agreement the amount of coverage that you need, but they can not tell you which home insurance company you have to use. You can usually get lower rates by shopping for a homeowner’s insurance policy on your own.

As your independent agent, we can help you get the lowest rate on the home insurance you need. Give us a call and an independent agent will be happy to get you the best quotes on homeowners insurance.