Course 4 – Unit 7: Shop Homeowners Insurance

Shop For Homeowners Insurance

Once your home inspection is complete and your loan is underwriting, it is time to get started with your homeowners insurance policy. Known officially as “hazard insurance”, homeowners insurance is a requirement of your loan approval. Lenders want to be sure that your home can rebuilt to its same specifications in the event of catastrophe, and won’t approve your home loan until such a policy is in place.

You shop for your hazard insurance, knowing that quoted premiums will vary by insurer based on the age of the home, its construction type, its proximity to services such as police and fire departments, and your deductible amount.

You’ll be asked to show proof that your policy is in effect as of your closing date. Many insurance policies are pre-written, and made effective upon payment of the first year’s premium, which typically occurs at closing — not before.

Receive Your Approval From Your Lender

After a file has been fully underwritten and all of the conditions are satisfactorily met, a final underwriting approval will be issued. This is known as a “Clear to Close”. Clear to Close means that the documentation you provided to your lender have met their approval, and that no additional paperwork is required.

When you are Clear to Close, your lender is ready to fund your loan and will begin communicating with the closing agent to prepare your documentation for closing.