CHAPTER 10 Finally: Ready to close
So far you have mastered all the challenges regarding your home purchase, and now it’s time to close. But before you get the key to your new home you need to go through insurance, warranty, appraisal, and mortgage statement on the property.
MAKE SURE YOU'RE COVERED! VERED!
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 the 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 the 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 a disaster occur. A standard homeowner’s insurance policy generally protects against: • Fire and lightning • Damage from hail and windstorms • Theft and vandalism • Smoke damage
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