Buying your first home is an exciting event for a young couple, but home ownership comes with a lot of responsibilities. In fact, before you can close on the house and take possession of it, you will need to complete many steps, and one step will be to get home insurance on the house. When banks issue loans for homes, they always require the borrowers to have home insurance, and here are a few things you should know about this.
You need proof of insurance at your closing
When you are buying a house, you will get a closing date from your real estate agent when all the paperwork is complete and the sale is ready to be finalized. At this appointment, you will need to bring numerous things with you, including your driver's license and a check if needed.
In addition, you will need to bring proof of home insurance. This means you will need to get the insurance prior to your closing date, and you will need to pay for the insurance. After doing this, the insurance company will give you a letter that shows your policy number and the information about your new policy.
Your lender will monitor your policy
When you get the insurance, you will need to tell your insurance company who your lender is. They will ask for the name and address, and this is done because they will contact your lender if your policy lapses. This means that if you miss a payment and the policy is cancelled, your lender will know right away.
Lenders require home insurance for protection. If they loan you money to buy a house and the house burns down, the insurance on the home will pay the lender for the balance owed. This insurance also protects you, because if you did not have insurance when the house burned down, you would owe the lender for the balance on the loan.
You can pay the homeowner's premiums with an escrow account
If you prefer to pay your homeowner's insurance in monthly payments, you could ask your lender if you could set up an escrow account for this. If your lender agrees, you would pay the lender the monthly portion of your home insurance each month when you make your mortgage payment. When the annual premium is due for your home insurance, your lender would use the money you have been paying all year to make the payment for you.
If you are buying a house and have not yet purchased home insurance, you will need to do so quickly. You must have it to close on your house. To learn more, contact a home and auto insurance agency today.