• No.  The Good Faith Estimate includes all of the closing costs related to your home purchase.  Some of those fees are paid to your mortgage company, but many are not.  You will be able to decide which insurance company you want to work with for your homeowners insurance policy.

Why do I have to pay for an entire year of homeowners insurance at closing when I purchase my home?

• Insurance companies require that your homeowners insurance premiums be paid a year at a time, in full, in advance of that year of coverage.  Thus, one of your closing costs will be to pay for a full year of homeowners insurance coverage.

OK, but then, why does my Good Faith Estimate indicate I'm paying for another three months of insurance even beyond the first year's premium??

• About 10 or 11 months after you purchase your home, your mortgage company will need to send a full year's payment of your homeowners insurance premiums to your insurance company to pay (in full, in advance) for the second year of homeowners insurance coverage for your house.  Since your mortgage company will be collecting 1/12th of the annual cost of insurance from you each month as a part of your mortgage payment, they also need to fund your escrow account with a few months of the insurance costs at closing so that they will have enough funds to pay for a full year of insurance after 10 or 11 months when that payment comes dues.

What happens to all of this money I'm paying in advance when I sell my house?

• The escrow account that your lender sets up for you will always have quite a bit of your money in it - to allow your lender to pay the insurance premiums and property taxes on your behalf.  When you sell your house, any excess funds remaining in your escrow account will be returned to you after closing.

Why does my lender escrow funds for taxes and insurance, anyhow?

• Your lender has a vested interest in making sure you are paying your property taxes and homeowners insurance -- they often are on the hook for 50%, 70%, 80%, 90% or even more of your home value.  As such, they require you to pay 1/12th of the insurance and property tax costs to them (the lender) each month so that they can ensure that the payments are made to your locality (taxes) and your insurance company.
  

• Insurance companies consider a vacant home to be a much higher risk than an occupied home.
   
  
• Some insurance companies do not offer Vacant Home Insurance.  Thus, do realize that if you notify your insurance company that your home is vacant, they may give you a limited timeline during which they will still insure the home.
   
  
• If your insurance company does offer Vacant Home Insurance, it will likely be at a much higher cost than your current insurance policy.
   
  
• If you do not have Vacant Home Insurance, but your home is indeed vacant, and you file a claim for property damage, your current insurance policy may not cover that loss because your home was vacant.
   
• Some insurance companies will merely limit the scope of your current coverage once you move out of the house.  For example, some companies may not include coverage for vandalism or glass breakage.

It is best to have these conversations with your insurance company before you move, but regardless of where you are in the process of moving out of your home (and thus leaving it vacant) you need to understand what your current insurance policy will and will not cover so that you can make the appropriate decisions about your insurance coverage into the future.

• Farmers Insurance Vacant Home Insurance
• American Family Insurance Vacant Home Insurance
  
• Foremost Insurance Group Vacant Home Insurance
• Bankrate.com: Insuring Your Vacant Home

Please note that I am not endorsing Farmers Insurance, American Family Insurance or Foremost Insurance Group --- I do not know much about any of these companies --- but these are some companies that seem to offer this type of insurance coverage.  Please do your due diligence in making any changes to your insurance coverage or company.