Failing to provide this correctly could lead to a postponement of the closing date. Your mortgage broker needs to see an insurance binder with the bank’s name and the proper language. It is important to remember that there is a variation between buying and rebuilding your house.Īn appropriate homeowners insurance policy would cover up to $375,000, not the amount of your mortgage.

But reconstructing it (including labor and materials) could cost up to $375,000. For example, if you borrowed $250,000 after making a down payment of $50,000, that means the house is worth $300,000. You certainly don’t want to miss the difference in case of a disaster such as a fire. It is likely that the amount to reconstruct your home will be different from the mortgage amount you take out. Your chosen mortgage broker or loan officer has to meet the lender’s standards, but it is also important for your home insurance policy to cover what it would cost to reconstruct your house in case of a claimable event and not just the value of the mortgage.

When obtaining a loan from a bank or other lender, you will be expected to provide proof of an insurance policy sufficient to either rebuild the home or cover the mortgage amount. Even if you have bought thirty homes before, you may not realize that homeowner’s insurance can complicate the mortgage approval process in Boston, MA. When buying a new house, getting help from a trustworthy insurance agent and an experienced mortgage broker is essential.

Homeowners insurance binder for loan