Homeowners’ Insurance Policy: This must be secured prior to the date of closing.
Settlement Statement: You should have a copy of the Settlement Statement before the date of Closing. Generally this will not be available until one or two days prior to the actual Closing, but it is important to have it because it gives you the total amount of cash you will need at Closing and also how those various funds will be dispersed. In addition, it gives you an opportunity to iron out any discrepancies prior to sitting down at the Closing table. Your Agent should also have a copy for review.
Start asking for the settlement statement 4 or 5 days before the scheduled closing. This will save you having to chase it down the night before your closing.
Certified Funds: On the day of Closing you will need certified funds for closing costs and down payments. This is an important reason for needing a copy of the Settlement Statement a day or two in advance–so you know the amount of funds needed and so that any problems can be handled in advance.
Insurances
One of the primary activities at the closing or escrow is the verification of all of the insurance that is needed or desired when buying Real Estate.
Title Insurance: Insures that the title or deed to the home is good and marketable. This is only issued after a successful title search. Title Insurance would most likely protect you, for example, if an unknown additional seller (for example an ex-wife or husband) suddenly surfaced months or years after you took possession of the property.
Homeowner’s Insurance: Insures the home against damage or theft. This insurance will be structured to protect both you, as the owner, and the lender. There can be a good deal of variation in policies. See the section on saving money on homeowner’s insurance for hints on getting the most insurance for the least amount of money.
Personal Mortgage Insurance (PMI): This insurance, although paid for by you, protects the lender against a loss should you default. It is present and required on the majority of loans that have less than a 20% downpayment. Recent changes in laws affecting PMI will make it easier to get this insurance removed when the equity in your home reaches 20%.
Do not confuse PMI with mortgage life insurance, which would pay off your mortgage should you die before it is paid off. Mortgage life insurance can be purchased through your Insurance Agent, but is not required.
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