Getting homeowner's insurance and keeping your lender informed of any changes to your coverage are essential measures in protecting your home. Timing is crucial to ensure you have enough coverage and that your lender is updated at every stage.

When to Shop for Insurance

A few key things to consider when looking for homeowner's insurance. First and foremost, you must begin the procedure well in advance of the expiration of your present insurance. This gives you ample time to research several insurance companies, compare prices, and determine available coverage. Getting insurance is usually a prerequisite before closing on a new home purchase. This means that it's wise to start looking for homeowner's insurance as soon as you decide to buy a home.

Mortgage Pre-Approval Stage: While pre-approval doesn't require insurance, shopping around early allows you to compare rates and coverage options. Understanding potential costs can help with budgeting for your new home.

Under Contract: Once you have a signed contract, it's time to secure homeowner's insurance. Research different providers, get quotes, and choose the policy that best suits your needs and budget.

Closing Day: To finalize the closing process, be prepared to present a certificate of insurance (COI) proving active coverage.

When to Notify Your Mortgage Lender About Insurance Changes and Updates

Notifying your lender of any modifications to your coverage is imperative to guarantee that the requirements of your mortgage agreement are being followed. Notify your lender as soon as you make any changes to your homeowner's insurance policy, including adding endorsements or modifying the coverage limits. If you don't, there may be a breach of contract, and your mortgage may be in trouble.

Policy Changes: If you make significant changes to your homeowner's insurance policy, like increasing coverage or switching providers, notify your lender. This ensures they have accurate information on file and that your coverage meets your loan requirements.

Mid-Term Cancellations: If you are making a mid-term change to your homeowner’s insurance, you should notify your lender immediately. Notifying your lender early can help avoid payments to the incorrect carrier or double payments from your escrow account. You should avoid canceling coverage with one carrier before securing new coverage with a new carrier when making a mid-term change.

Property Changes: If you make substantial renovations or additions to your home, it may affect your insurance coverage and value. Discuss any significant renovations with your lender beforehand and update your policy accordingly.

Maintain Communication with Your Lender and Insurer

Clear communication with your lender is essential throughout your homeownership journey. Feel free to ask questions about your insurance requirements. 

Maintain a Paper Trail: Keep copies of your homeowner's insurance policies and any related communication with your lender for future reference.

Schedule Insurance Reviews: Regularly review your homeowner's insurance coverage to ensure it aligns with your evolving needs and property value. This might involve consulting your lender or insurance provider.

You need to acquire homeowner's insurance well before your closing date or your current policy's expiration. Notifying your lender of any changes in coverage is also critical to ensure that your mortgage agreement is being followed. By remaining organized and diligent, you can protect your real estate investment and keep your lender happy. The expert staff at Standard Mortgage (NMLS#:44912) is here to help with all of your mortgage lending and homeowner's insurance questions.