CHAPTER 12 The Closing Process
Buying a house brings many challenges, especially for those unfamiliar with the intricacies of real estate purchase, transfer, and financing. This section is a brief, user-friendly guide to help you navigate the issues of insurance, warranty, appraisal, and mortgage statements on the property. In this section, we also present “10 Things to Know When You’re Closing Your Home for the First Time,” which offers some of the best tips to follow to avoid letting things get out of hand.
HOMEOWNER'S INS WNER'S INSURANCE: MAKE SURE YOU'RE COVERED! VERED!
Unless you’re paying the home's sale price in cash, your lender will require the purchase of homeowner’s insurance before closing. After the agreement to purchase, but before closing and title has transferred, it’s the seller’s obligation to ensure appropriate insurance coverage on the house and property. Immediately after closing the sale and when the title transfers, the seller no longer has an insurable interest in the property; hence, the seller’s coverage ceases. The new owner must have homeowner’s insurance coverage in place. In most cases, you’ll be asked to provide proof that you’ve prepaid one year’s worth of coverage before the lender will set closing. The lender holds a lien on the property until the mortgage has been paid off. To safeguard their interest, lenders want financial protection in the form of a home insurance policy to pay for the cost of rebuilding your home should a disaster occur.
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