Buying a home is stressful enough. The last thing you want is an insurance problem delaying your closing date. Here's exactly what you need to know — and what to do.
What Your Lender Requires
Before funding your mortgage, your lender will require:
- Proof of insurance: A binder or declarations page showing active coverage effective on or before closing day
- Minimum coverage amount: At least the loan amount or replacement cost value (RCV), whichever is greater
- Lender listed as mortgagee: The lender must be named on the policy so they receive notice if coverage is cancelled
- First year's premium paid: Most lenders require the premium to be paid in full before or at closing (often rolled into closing costs)
The Timeline You Should Follow
- 3 weeks before closing: Start shopping for insurance. Get at least 3 quotes from different carriers.
- 2 weeks before closing: Select your policy and bind coverage (this gives you a policy number and binder).
- 1 week before closing: Send the binder or declarations page to your loan officer. Confirm the mortgagee clause is correct.
- Day of closing: Your closing disclosure will show the first year's premium. It's paid at closing or already paid directly to the insurer.
What Loan Officers Should Know
As a loan officer, you can protect your clients (and your closing timeline) by connecting them with a trusted independent insurance agent early in the process. An independent agent can shop 50+ carriers to find the right coverage at the right price — often in the same day.