Once your loan is approved and ready to close, you will need to purchase the Homeowner’s Insurance policy and pay the first year’s premium prior to setting a closing date. You cannot set the closing date without this vital piece of your mortgage application “puzzle.”
Your Lender will provide you with basic information both to obtain the correct insurance coverage and the language that must be included in the policy. Typically your coverage will be the replacement cost of the house. Your insurance agent consults an actuarial table prepared by the insurance company to determine the cost to replace the house in the event of catastrophe (such as a fire). You always want to be careful not to “over-insure” your house because you’ll pay higher premiurms for insurance coverage you will never use.
You can enhance your insurance policy by upgrading certain features of the policy with regards to your personal property, water damage from leaks, and etc.
When buying your insurance, you’ll need to provide to your Lender prior to setting the closing date the following:
1. Binder
2. Paid receipt
3. Declarations page
Typically the insurance agent knows what you need to provide to your Lender. Your agent may need a copy of the appraisal to write the policy.
When the agent puts together the quote, bear in mind they want a closing date. You can’t get a closing date without the insurance. Give your agent an approximate date. You can always change the date once your closing is scheduled.