CHAPTER 10 The Closing Process
Deciding to buy a house brings many challenges, especially for those unfamiliar with the intricacies of a real estate purchase, transfer, and financing. This section is a brief, user-friendly guide to help you find your way through the issues of insurance, warranty, appraisal, and mortgage statement on the property. In this section, we also present “10 Things to Know if You’re Closing a Home Deal for the First Time,” which offers some of the best tips to follow in order to avoid letting things get out of hand.
HOMEOWNER'S INS WNER'S INSURANCE: MAKE SURE YOU'RE COVERED! VERED!
Unless you’re paying the home's sale price in cash, your lender will require the purchase of homeowner’s insurance before closing. It's the seller's obligation to ensure appropriate insurance coverage until the Deed is recorded. It's the buyer's obligation to ensure appropriate insurance coverage on the house and property effective on the closing date. This is EXTREMELY important. Your lender won't release funds for your closing unless you have proof of insurance coverage. Immediately upon closing the sale and when the title transfers, the seller no longer has an insurable interest in the property, so the seller’s coverage ceases. The new owner must have homeowner’s insurance coverage in place. In most cases, you’ll be asked to provide proof that you’ve prepaid one year’s worth of coverage before the lender will set closing. The lender holds a lien on the property until the mortgage has been paid off. To safeguard their interest, lenders want financial protection in the form of a home insurance policy to pay for the cost of rebuilding your home, should disaster occur. 77
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