THE CLOSING PROCESS Deciding to buy a house brings many challenges, especially so for those unfamiliar with the intricacies of 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 INSURANCE: MAKE SURE YOU’RE COVERED!
Unless you’re paying the sale price of the home in cash, your lender will require the purchase of homeowner’s insurance before closing. After the agreement to purchase, but before closing and title has transferred, it’s the seller’s obligation to ensure appropriate insurance coverage on the house and property. Immediately on closing the sale and when title transfers, the seller no longer has an insurable interest in the property, hence 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.
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