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Maverick
Maverick, Lawyer
Category: Real Estate Law
Satisfied Customers: 6423
Experience:  20 years professional experience
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Got a question about lenders. We have made it past

Customer Question

Got a question about lenders. We have made it past underwriting for a house we are buying and now the broker/lender is asking for the insurance statement binder for our current house and what we plan to do with it after we move. We are not using it in any way to buy the new house so why do they ask for and need it? Also before I paid off my current house the mortgage got sold to multiple banks and each time the loan went up, how do I protect myself from this happening again?
Thanks as always your info has helped me in many ways.
Submitted: 1 month ago.
Category: Real Estate Law
Expert:  Maverick replied 1 month ago.

Welcome to Just Answer! My name is***** give me a few minutes to review your inquiry. Thank you for your patience.

Expert:  Maverick replied 1 month ago.

1. Normally, they would ask for a temporary issuance of proof of insurance that will "bind" coverage until the formal policy is issued for the new home. Typically, such a binder is issued for a 30 day period. This allows ample time for the company to process and print the actual policy. The binder itself is supposed to list the home insurance coverages, property location, policy period, annual premium and mortgagee information. Then, the bank or mortgage company will request that the insurance be paid in full for the closing and that the binder state that it has been paid in full. So, if they are asking for a binder for your current home, it does not make much sense as such binder would have been issued at the time when you purchased your current home. What they may want is proof that your current home is insured to give them comfort that they can move forward and that you will likely be able to secure a binder for the new home.

2. If you want to make sure your debt amount on a loan does not change, please make sure there is not an adjustable interest rate in the loan. If the interest rate is fixed through out the term of the loan, then the amount of money owed on the loan should never change so long as the payments are being made on time; even if the loan is later assigned to other banks. If the loan changes upon assignment, it is likely a breach of contract on the part of the lender and you have to call them out on it.

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