Closing on a Home Early? Here’s an Important Reminder

When a home purchase is going to close earlier than expected it’s important to confirm that the insurance company is aware of the earlier start date for the policy.  If not, you might run into a situation on closing day that involves an underwriter flagging the final review of signed documents (since no lender wants to hand out money for a property that is not insured).

I recently encountered a situation in which the contract closing date language was appropriate (written as “on or before” a specific date, which in Washington state gives escrow the option to close early), but unfortunately the loan processor didn’t catch the fact that the insurance policy was set to begin on the final date mentioned, not before.  It wasn’t until the buyer-signed documents were going through final lender review on the morning of the closing that an underwriter caught the oversight, which then triggered a spate of calls to the insurance company from both the buyer and the loan processor.

An insurance policy change like this can often be made quickly, but for whatever reason in this case even after a conference call with the buyer, the loan processor, and GEICO it still took several hours, and by the time confirmation was sent to the lender it was past the wire cut-off time.  Fortunately a late wire was allowed and the home still closed that day, but considering that this occurred on a Friday prior to a 3-day weekend during which cleaners and contractors were scheduled to do work at the property, it could have been a huge inconvenience!

Just another one of those “little” details that can potentially hang up a closing. 🙂  I recommend adding this reminder to any transaction checklist.

Irene Nash

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