Are you a first-time homebuyer in Michigan and confused about what needs to be done before closing and when you should buy your home insurance?  Like most first-time homeowners, you’re probably financing your new home.

Most lenders require their borrowers to have homeowner’s coverage before finalizing their mortgage. You’ll probably be asked to provide proof that you prepaid for a year’s worth of coverage before the lender considers closing.

Owning a home is similar to owning a car. The lienholder technically owns the house until you’ve paid off your loan. As a result, lenders want to make sure they’re properly protected in the event something happens. It’s really important to make sure you have the proper homeowner’s policy for your new home.

What Kind Of Coverage Do I Need For My New Home Before Closing?

Your lienholder’s requirements will depend on the coverage you need. In most cases, Michigan lenders want you protected enough to pay for the cost to rebuild your home from the ground up, in the event disaster strikes.

What will your policy cover? Here is a list of things a standard homeowner’s policy would cover including:

  • Fire and lightning
  • Damage from hail and windstorms
  • Theft and vandalism
  • Smoke damage
  • Damage from the weight of ice, snow, or sleet
  • Frozen plumbing, heating, AC, and other household systems
  • Vehicles (and aircraft)
  • Riots or civil commotions
  • Explosions

When you talk to your Michigan insurance agent, they should explain your coverage from liability, personal belongings, fences, garages, to additional living expenses if your home is temporarily unlivable.


Get a Home Quote from Compass Insurance Agency & Save $642


Who Pays For My Homeowners Insurance At Closing?

Most homeowners pay their new home insurance through escrow by the lender at closing. If you decide your insurance and taxes are not going through escrow, you can expect to pay the first year upfront.

If you do decide to pay your first year of insurance upfront, it allows you to exclude that premium from your closing costs. These costs typically include the lender and other fee’s you’re responsible for in your down payment. Generally, closing costs are paid in one lump sum.

You may also ask to be set up for an escrow account if your mortgage agreement allows for it. This helps you avoid paying a large sum all at once for ownership costs. Another way to look at an escrow account is as a savings account that helps you pay your mortgage, property taxes and home insurance in small installments.

Your lender would deal with the payments from your escrow, easing up stress and financial management for you!

What Else Should I Know About Buying A House & Insurance Coverage?

Talk to a local Michigan insurance agent at Compass Insurance Agency of course! Our agents help make the home buying and insurance process go as smoothly as possible, because not only do we have experience with insurance since 1969, we also work with many local mortgage lenders.

We do all the legwork for you by shopping 17 of the best local insurance carriers, finding you the best coverage at the most affordable premium, while also taking customer service ratings into account.

We explain your coverage in full, making sure you understand what’s covered under your policy and what is not, and help plan for the future based on our knowledge of similar homeowners in your area.

For questions about homeowner’s insurance before, during, or after closing please call us today at 616-245-5555.