Buying a home is an exciting process, but it can also be exhausting. After weeks or months of searching, when you finally sign a contract, the real race to closing begins.
Between deposits, inspections, appraisals, title verifications, and submitting documents, you’ll need to meet a series of strict deadlines to avoid losing the contract. And, as if that weren’t enough, you’ll also need to secure homeowners insurance before closing.
Homeowners Insurance: A Lender’s Requirement
Although it’s not a legal requirement, mortgage banks, lenders, or financiers will require you to present proof of homeowners insurance two to three weeks before closing. Without this insurance, you won’t be able to finalize your mortgage.
The lender will ask that the insurance cover at least:
- 100% of the replacement value of the property.
- The reconstruction cost in case the home needs to be rebuilt after a disaster.
How Do You Insure a House That’s Not Yours Yet?
This is resolved with a special contract. The insurance company will specify that the property will be covered from the moment the purchase becomes official.
The Cost of Homeowners Insurance: An Expense to Consider
Homeowners insurance is one of the significant upfront expenses when buying a home. Additionally, in most cases, lenders will require you to pay a full year in advance at the closing. This means you’ll need to budget between $6,000 and $8,000, or even more depending on the property’s value and current market conditions.
Tips for Finding the Right Homeowners Insurance
The best approach is to involve an insurance agent early in the home-buying process. A skilled agent from 51³Ô¹ÏºÚÁÏÍø will:
- Help you find an affordable policy.
- Ensure the property you’re considering is insurable.
- Verify that the insurance contract meets the lender’s requirements and adequately protects your investment.
Waiting until the last minute to involve an insurance agent could cause delays in closing—or, in the worst-case scenario, cancellation of the purchase process.
In conclusion, buying a home is a significant step, and homeowners insurance is a key tool to protect your investment and ensure you obtain the mortgage. Don’t leave this matter to chance.
Contact 51³Ô¹ÏºÚÁÏÍø! Our advisors will help you find the most competitive prices on the market, provide personalized attention, and answer all your questions. Be prepared for closing with no surprises.
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