I am in the process of filling out my mortgage application for our first house. The application requests proof of homeowner’s insurance, but we haven’t done the inspection yet, so it doesn’t make sense that we would have homeowners insurance yet either. Anyone know what we’re supposed to do with that section?
Just to explain what actually happened: my husband ended up talking with the bank and they explained (rather late) that they do indeed require proof of home insurance before closing or they will not issue a loan. However, since it is still so early in the process all they wanted was a signature on the form which would indicate to them that we would indeed buy insurance at the proper time. Of course none of this was explained on our paperwork which appeared to demand immediate proof of insurance – but that seems to be the irritating way of the system.
Just to explain what actually happened: my husband ended up talking with the bank and they explained (rather late) that they do indeed require proof of home insurance before closing or they will not issue a loan. However, since it is still so early in the process all they wanted was a signature on the form which would indicate to them that we would indeed buy insurance at the proper time. Of course none of this was explained on our paperwork which appeared to demand immediate proof of insurance – but that seems to be the irritating way of the system.
Home | Insurance | Blog article: Do I Need to Provide Evidence of Homeowners Insurance Before Buying a Home?
VitaBella 9:04 am on May 27, 2010
I disagree with the other poster.
Yes, you MAY have to provide proof of insurance prior to the close of escrow. I have been seeing more and more of these….your realtor should have told you that once you open escrow, you should immediately start to look for insurance. Now, when you do go shopping for coverage, the agents don’t usually quote unless the house you are purchasing fits the insurance company’s guidelines. Once quoted, you can be sure that the policy can be issued by the agent (Unless of course, there are conditions to the quote before binding, such as retrofitting for earthquake….a biggie here in CA).
Also, in CA, a CLUE report is required prior to closing escrow. This is usually done by the seller’s realtor. If it comes back clean (in other words, the property didn’t have any previous losses on it) this is another problem that the bank won’t have to deal with, and won’t delay the close of escrow (previous claims on the house, + refusal of coverage by an insurance carrier = disaster at the close of escrow).
If you have an independent agent that can work with you on this, they can provide the lender with a "Sample" evidence of Insurance. This shows that you have been activly looking for insurance and you are ready to "go" with it. In some cases, you can even have the agent address a letter to your lender with your intentions. I have done this several of times for our real estate and insurance clients.
The issuing of the policy is not a factor, since most carriers can issue a policy the same day. The lenders just want to know if you will be able to purchase the insurance so they don’t get held back at the close of escrow.
You may also want to talk to your lender. Ask them if a letter from your agent will suffice.
Good luck!
mbrcatz 9:04 am on May 27, 2010
You need to have a binder of coverage at the time of the closing. First you apply for the mortgage, then you get the inspection, and before the closing – even just a week before – you go to your insurance agent and buy the policy.
jlf 9:04 am on May 27, 2010
You will need it at the time of closing, not for the application.
Whitley 9:04 am on May 27, 2010
I am a realtor and deal with this question on a regular basis. While homeowners insurance is not required by law, most mortgage lenders do require you to have it in order to borrow money from them. They will require that you purchase a homeowners insurance policy for the amount of the mortgage. It is not considered a mortgage cost, but lenders require that their "minimum insurance requirements" be met before they will fund a loan.
Confusion some times arises as to the actual amount of the insurance required. The insurance company will usually cover a home for the value of the structure only – not the land. If this amount is less than the mortgage, they will issue a policy for the higher amount if the lenders requires.
Rakshit K 9:04 am on May 27, 2010
No, it is not required, you can buy home without having home owner insurance and same ways you can buy home owner insurance policy without having ownership of home.
Fore more visit – http://www.insurancereview.in
Tim 9:04 am on May 27, 2010
homeinsurance.awardspace.us – try this one. Got my home insurance from them. As I know they provide such a service.
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