How can you buy home owner's insurance without a house?

Question

We are trying to buy our first home, and now before we even know if we will get financed, they want us to BUY home owner's insurance? How? Why? Wouldn't that be done once we buy the house? Especially if it's escrowed in to our monthly payments?

Answer 1

No, what your lender is saying that you need a home
owners policy or binder on the home that you are going to buy. You obviously have already signed a contract, and doing the process of setting up the closing, you have to furnish them at least a binder, that will tell them that you have coverage once the loan is closed and the house is yours. They will collect the amount for one year, plus about two months to establish your escrow account to ensure that when the insurance policy comes up for renewal that there will be enough funds to cover the renewal cost, which generally will go up a little bit. This is why they charge a full year plus a couple of months. Just give your agent the description of the house or a copy of the appraisal and they can do the rest for you. Your broker/lender will then accept a faxed copy, and the original policy can be furnished at the closing. Your mortgage originator or loan officer should have explained all this to you. If you aren't going to have an escrow, then you will just furnish a paid in full for one year home owners policy at the closing, but again the lender/broker will need at least a binder of proof and the cost prior to sending out the closing package to the attorney for final closing of the transaction.

Answer 2

Call up an insurance agent and tell them you need to prove you have home owners insurance prior to closing. They'll ask you questions about the home you plan on buying and will give you an estimate on monthly amount over the phone. Then you will have to sign paper work. The insurance company will then provide the Lender with a copy of the insurance binder at closing. All lenders require proof of insurance BEFORE closing or you will not close.

I purchased a townhome/condo which is covered under the HOA blanket insurance policy. However, I wanted to get Renters insurance to be covered, I purchased the policy before I ever closed on my house, AND my agent came to me to sign the paperwork.

Answer 3

I might suggest that you try this internet site where onel can compare rates from different companies: http://insure-cheap.info/index.html?src=2YAxskfkPY21

RE :How can you buy home owner's insurance without a house?
We are trying to buy our first home, and now before we even know if we will get financed, they want us to BUY home owner's insurance? How? Why? Wouldn't that be done once we buy the house? Especially if it's escrowed in to our monthly payments?
Follow 2 answers

Answer 4

I would recommend that you try this web site where you can compare rates from the best companies: http://INSURE-HELP.COM/index.html?src=2YAfis3li6K

RE :How can you buy home owner's insurance without a house?
We are trying to buy our first home, and now before we even know if we will get financed, they want us to BUY home owner's insurance? How? Why? Wouldn't that be done once we buy the house? Especially if it's escrowed in to our monthly payments?
Follow 3 answers

Answer 5

They probably just mean that they want you to get a binder. It's just saying that you have homeowners insurance in line.

The reason why, is because years ago (when this wasn't required), people would buy a home and after they closed find out that they couldn't qualify for the insurance, because the claim history remains with the house. So if there were too many claims (theft, fire, etc) on the property, insurance companies would see it as high risk and not touch it.

By getting a binder beforehand, you can know if your potential home will qualify and if it doesn't, you can walk away from the transaction.

Answer 6

If you are obtaining financing to purchase your home, the lender will require you have proof of home owner insurance before they will grant you a loan. You generally need to pay the first year upfront and show the lender your paid receipt. Your policy does not actually go into effect until you close on the property. If you don't close, then obviously you would get your money back.

Answer 7

Something is wrong here...
"They" want you to buy an insurance on the house you do not have?
Maybe you misunderstood, when you were told that insurance was required as one of the conditions of getting a mortgage. You need to have a policy "lined up," have it ready to be in effect, when the house is yours, but you do not have to actually BUY it now.
And who are "they?" The bank? Did you ask them to explain all this to you? What does your Realtor say about it?
Do you have a Realtor working for you? NO? Well, this is why you should never buy real estate without an agent (and it doesn't even cost you anything to have a Realtor on your side, when you are a buyer.)

Answer 8

Your lender wants to know that you have insurance in place on closing day. It cannot be done after, they need it for a security. Contact a local agent that you know & tell him/her what you are doing, they will be able to help you. It will not cost you anything if finance is not approved, don't worry. I doubt it is part of your payment, that is a different insurance. Good luck :)

Answer 9

They want you to have an insurance company set up and ready to go when you get your house. You can not sign final papers on a house with out insurance set up ready to take effect. You have to pay the first years insurance up front, year 2 comes out of escrow you paid all year long!

Answer 10

You have to have something ready to go because you must have insurance from day one if you have any kind of mortgage. No insurance agent will think you’re crazy if you come in to get your policy arranged.