Is your home purchase transaction going to close earlier than expected? If so, it’s vitally important to make sure the insurance company knows about it. If not, you might find that on the closing day the lender’s underwriter red-flags the final review of signed documents because the closing date falls before the insurance coverage starts.
Here’s a recent real-life example: 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 the loan processor didn’t catch the fact that the insurance policy was set to begin only on that specific date. The buyer signed all of his loan documents, and it wasn’t until the lender was doing its final review – on the morning of the closing day – that an underwriter caught the oversight, triggering a flurry of calls to the insurance company.