After you’ve signed your Real Estate Contract and you’ve
agreed to purchase a home, there’s still work for you to do as a Buyer and Borrower …
Typically a Real Estate Contract reads that Home Buyers must make Mortgage Application within 5 business days after signing the Contract. During the Mortgage Application (and even before) I, as your Mortgage Lender, will advise you to begin shopping for your Homeowner’s Insurance.
For the Pre-Approval, and even at the time of Mortgage Application, I’m using an ESTIMATED dollar amount for the cost of your Annual Insurance Premium. Why? Because I (and Underwriting) must know and use the actual annual premium to calculate your EXACT total housing monthly Mortgage Payment.
Note: No Underwriter will clear a file for Closing without knowing the exact cost for all components of the monthly Mortgage Payment. So not having this portion of the Process completed in a timely fashion can cause Mortgage Approval and Closing delays.
Recently, I had Home Buyers that dragged their feet a bit regarding the pursuit of their Homeowners Insurance Policy. When they finally received a quote for their Homeowners from their Insurance Agent, it was more than double the amount I’d used as the estimate for their yearly insurance premium at the time of their Mortgage Application.
After hearing the higher premium amount, I advised my clients to revisit the quote with their Insurance Agent. If that conversation proved unsatisfactory, I recommended they seek a second comparison quote.
Eventually, my Borrowers did receive their Homeowners Insurance Policy, one containing appropriate coverage at a more reasonable cost. I then proceeded to re-submit their loan file to Underwriting for their all-important “Clear to Close”.
In Chicagoland, Mortgage Applicants are asked to pay the Homeowners Insurance Annual Premium directly to the Insurance Agency and IN ADVANCE of their Closing. Upon full payment, a receipt is then provided to us (the Mortgage Lender). That way no premium payment is still due on the actual day of Closing. (Paying at Closing can be an option, in some cases.)
Not seeing to the Homeowners Insurance Policy properly is just one way the scales for Mortgage Approval can be tipped from “Approved” to “Not Approved” for Borrowers. Carefully following the instructions provided to you by your Mortgage Lender throughout your Mortgage Process … and then taking care of them in a timely fashion … saves you from stressful situations arising later in your Mortgage Process.
Should you need a referral for an experienced, qualified Chicago area Insurance Agent, please contact me. I’ll be happy to provide you the name and contact info for someone to assist you with your insurance needs.
* Hoping to Buy, Construct, or Refinance a Home in the New Lenox area, another Lincoln-Way Community, Will County, or elsewhere in the Chicago area? Contact Me Today! I’ll put my 36 years of Mortgage experience and expertise hard to work on your behalf.
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