Home Loans and Support

Do I need to buy homeowners insurance even before my loan is approved?

Discussion in 'First Time Home Buyers' started by Alonso, Jan 28, 2012.

  1. Alonso

    Alonso LoanSafe Member

    I just received an e-mail saying that my loan is out of underwritting and was put on " suspense", the underwritter requested a few documents. One request was that I provided the name and number of the insurance company, why would I need to buy homeowners insurance for a year and not knowing if my loan will be approved or not?, Any help will be appreciated. Thank You.
  2. freedomwon

    freedomwon LoanSafe Member

    Alonso - The lender will require you to purchase homeowners insurance & can be included in the escrow instructions. They also require to be listed on your homeowners policy. So, yes, you need to secure a quote for a policy. Your premium gets paid on the day you close escrow & that's the day your policy actually goes into effect.

    Did you receive a GFE=Good Faith Estimate from your lender? That outlines step by step all the costs you can expect at closing.

    If you already have an auto and or life insurance policy in place with an agent, check to see if they offer homeowners insurance. You may qualify for a multi-policy discount. Could save you a few bucks!
  3. Alonso

    Alonso LoanSafe Member

    Thank you for the response, now it makes sense for me, I thought I would have to pay upfront a year in advance for the insurance of the house , without even knowing if my loan would be approved. Basically they just want some assurance that I will have the house insured for when the loan finally closes, or am I wrong?. Thank You.
  4. freedomwon

    freedomwon LoanSafe Member

    You will pay a year upfront but not until the close of escrow.
  5. Alonso

    Alonso LoanSafe Member

    I will go with my insurance agent that I have my auto insurance with and see if I can get a good quote. Will the insurance company provide me with a document or policy I can give to the lender since its just a quote? or will I actually buy a policy that will go into effect the date of the closing and I can cancel if the loan doesnt go through?
  6. freedomwon

    freedomwon LoanSafe Member

    You're not buying the insurance just yet. So for right now, a quote will do. You need to wait on instructions from the title company which your real estate agent should be keeping you informed of. More than likely, your funds will get deposited into the escrow account & then there will be escrow instructions to cut a check payable to the insurance company.

    Have you been informed about how much money you will be required to bring to closing?
  7. Alonso

    Alonso LoanSafe Member

    No, I have not been informed on how much money I would need for closing, just the estimate they gave me on the Good Faith Estimate but I know that can be different than the actual closing costs. My loan was put on suspense status with the underwritter requesting documents, I'm just waiting for my w2 for this year and the insurance I'm dealing with right now.
  8. freedomwon

    freedomwon LoanSafe Member

    A good agent takes the responsibility to coordinate everybody in the process. So he / she should be in contact with your lender, title company, selling agent etc. For now you're in a holding pattern until the loan is approved. Try your best to be patient!

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