Lessons Learned #3: The way things work

You might be wondering how the heck the whole insurance settlement and mortgage thing works in a case such as ours. This was one of 3,627 pressing anxieties that we had in the days immediately following the fire. We are six years away from paying off our mortgage, and we're deep into principal now. It is very rewarding to see your mortgage go down by leaps and bounds when you're in this stage and the mountainous interest isn't making up the majority of your monthly payment. And so it was that prior to December 25th we were happily winding down on the mortgage and figuring that we'd have about 5 rough years ahead with both kids in college during this final slide down the mortgage hill. But then...then we would have a house paid for and no college expenses and wouldn't life be wonderful and grand? We envisioned ourselves sitting poolside while gorgeous cabana boys with colorful accents served us fancy drinks with little umbrellas in them. Ok, maybe that was just me.

So when that fire ate our house, we immediately felt doom and realized that our perfect little plan was now spiraling out of our control. What we thought would happen was that the insurance company would give us the structural settlement (aside: there are multiple settlements and adjustors to deal with, just to keep things lively - you have your agent, the structural adjustor, the contents adjustor, and an auto adjustor - plus a whole cast of characters who crawl out of the woodwork and, believe me, I do mean characters) and we would have to pay off our mortgage first and foremost. Then we would take whatever was left over to use as a down payment on a new/rebuilt house which would of course come with its own 15 or 20 year mortgage. For people who were already not firing on all cylinders, this prospect was so overwhelmingly depressing. Pile that on top of ten tons of stress and 2 boatloads of anxiety, and it was not a pretty picture.

However, this piece of this particular story has a happy ending. We came to find out that the insurance company would indeed write us a single settlement check for the structure - which we would then turn over to our mortgage company. Since we have decided to rebuild, the mortgage company would be responsible for paying the builder (of our choice) in thirds. We just keep paying our same mortgage payments each month as if nothing had happened. In the end, the goal being that we have a new house with a 5 year mortgage left on it, at our current rate. That news brought serious relief, and we're hopeful that it actually goes the way "they" all tell us it will.

And that's the way that particular thing works.