Every homebuyer must set up Homeowners Insurance (HOI) before closing on their mortgage for a new home purchase. HOI document requirements can differ depending on the property type, so make sure to check out these articles on standard and condo policy requirements. Additionally, the home may be in a flood zone or some other high-risk area for natural disasters. The lender may or may not require some of these additional coverages, but it is important to consider so that you protect your new home and belongings. 

When to Look for HOI Insurance?

A finalized HOI policy will be necessary in order to receive the final approval for your client’s loan application. We recommend all borrowers finalize HOI at least 2 weeks before they are expecting to close, but getting the documents earlier is always better in order to get ahead of any issues that may arise. An HOI policy with higher than expected premium could affect your client’s DTI. Please note, your client will not be required to pay for the policy until closing, even if they have finalized it.

Choosing an HOI Provider

The borrower must choose their own Homeowners Insurance provider. There are many providers out there and we will work with all insurance companies, big and small. 

If your client needs somewhere to start, two HOI companies that we work with frequently and embody Morty’s goal of infusing technology into the homebuying experience are Lemonade and Hippo. Please check to make sure the property state is covered:

Lemonade

Hippo

Morty is Here to Help

Once your client chooses an HOI provider, they simply need to initiate a policy with the insurer and provide contact information (phone number and email address) for the agent they worked with. This can be uploaded straight into the Closing Tracker and the team at Morty will take care of the next steps. See below for more information.

What does the HOI provider need from us?

Once your client has selected an HOI policy, the agent might ask for a few pieces of information regarding your mortgage. Morty’s processing team will typically take care of this for you.

• Loss-payee clauses (sometimes called mortgagee clause):
  • This is a lender-specific legal clause where an insurer would pay the lender for a loss instead of the named insured. Below you will find the loss payee clauses of our most commonly used lenders.

• Loan number
  • The loan number is specific to each loan and can be found on the top section of the first page of the Loan Estimate. The loan number can also be listed as the Loan ID.
• Will the policy be escrowed?
  • Escrowing the HOI policy means that the lender will collect the HOI payments as part of the monthly mortgage payment, and your client will not need to worry about paying the policy separately. Most borrowers choose to escrow their HOI payments, but your client may choose to pay HOI themselves outside of the mortgage if the lender allows them to waive the escrow. If your client has chosen to waive escrows, they will need to pay the full first year of HOI before closing, but the monthly mortgage payments will not include extra for HOI.
• Is your client paying the first year upfront or at closing?
  • The premium for the first year of HOI in due before the policy starts. This is typically paid during the closing process as part of the closing costs, but your client may choose to pay this themselves upfront with the HOI company when they are finalizing the policy. If your client chooses to do this, make sure they provide Morty with the receipt showing that they paid.
• Effective Date
  • This is the closing date. The HOI policy must be effective on or before the closing date. If the closing date changes at any point, we may need to go back to the HOI company and update the effective date with them.