Hi guys! I don't know if I'm "in underwriting" but my loan app is being processed and I'm currently scheduled to close on my new (very first ever!) home on Jan. 11. I need to provide them with my proof of insurance. I have done some research and gotten some quotes, but I'd like your advice on how to choose. The quotes I'm getting are significantly lower than the estimate on the GFE -- am I missing something? I will probably go with an indpendent agent, but how do I compare apples to apples?
Get as many quotes as you can to try to compare. Small no-name companies might be cheaper, but you want to make sure you're covered in the event of a disaster and they don't drop you if you make even the slightest claim. Also, some companies don't cover certain areas. We found this out when we tried to go with an insurance company that gave us a quote and then said, sorry, we can't cover any home in this area because it's too close to brush. A few other companies that were initially low added to our quote because of passed claims on the property that the previous owners had filed. We eventually went with a well known insurance company and moved our auto insurance over to get a larger discount. The price ended up being very close to the GFE when all was said and done.
the references I'm reading say to get insured for "replacement value" of the home -- this is new construction, though, so isn't that pretty close to the cash value of the home?
The insurance company doesn't use actual replacement value so it is not really the cash value of your purchase. They have their own valuation formula they use so you will need to get the information they need to them. They will tell you what they need (living area, total building area, pool/no pool, age of property etc). For new construction you will get a discount, normally. Also remember the LO will quote the ins a little high usually because they don't have the exact figure. They would rather quote a little high than a little low.