Steps to take when getting a new loan or re-financing:
Author: Larisa Martin
Nowadays with the real estate market being as crazy as it is and in relation to that working with a bank or mortgage company to get a loan on your house, whether a new loan or a re-finance, certain procedures have to be taken in order to get everything updated on your home insurance policy.
If you are purchasing a new home and you know when the closing date is, make sure to contact your insurance agent with enough time to spare to get a new policy written and in force. Your agent will need information on the house itself, i.e. year of construction, construction type, square footage, etc. However, your insurance agent will also need the loan information from the mortgage company in order for that to be listed on the policy. The mortgage company will need to see that proof of insurance as well in order to close. Once that information has been exchanged, your agent will send all the documentation needed to the mortgage company to close on the deal. Good communication is needed between the agent and the bank; if the information is provided in a timely manner the process from quote to a new policy to closing can be an easy one.
If you are re-financing, make sure you inform your insurance agent or company about that. Most banks will want to see proof of home insurance prior to closing. If you do not have a copy of your policy, always contact your agent and they can send you that information.
Once closing is finished, always make sure you or the bank/mortgage company contacts your agent to update that information on the policy—especially if the loan is setup to be escrowed and the mortgage company is responsible for paying the insurance premium. Normally the bank will send over a written request that will show the new mortgage information and loan number so it can be amended on the policy. If the insurance company never gets that new information that can lead to the insurance premium never being paid which would put your policy in cancellation status. If the bank does not have proof of insurance showing them listed on the policy, they may purchase home insurance in place of your current policy which in the long run will cost you more money and hassle.
Lastly, communication is the key to making the loan to insurance process smoother. Never hesitate to contact your insurance agent for a new quote or for the most updated information in order to provide to the mortgage company. It really will save you a heap of trouble down the road.