You've been looking at houses for months looking for the perfect home to meet your family's needs. You got pre approved for a home mortgage. Finally, you found just the right house for what you need for your family. You get the home loan approved for that home. Then, you have to wait. Wait for the closing date. The closing date is approaching and the lender asks you for a binder be sent to her for closing.
What the heck is a binder? Insurance. Proof of insurance the mortgagee needs to prove that your new home is covered against fire and other perils that could cause damage to it. Often there is a rush to get all the final documents ready for closing within hours before the appointment. We insurance agents have to scramble to get a homeowner insurance quote prepared, accepted by you, an application sent to you signed and sent back and a binder and invoice faxed or emailed to the escrow officer or mortgage broker before the closing time and date.
Waiting until the last minute to look for homeowners insurance can cause panic. We are here to take away that stress. Just have your mortgage broker give us a call or email us. We can prepare a quote and a binder in a flash. We will select from top local and national homeowners insurers at a competitive price. In most cases you don't need to worry about paying for the insurance. It will be calculated in the closing costs. Escrow agents estimate the annual cost of homeowners insurance and include it in the estimated closing fess. By the time you go to the escrow closing conference you pretty much have an idea of how much money you need to bring with you.
We can then bill the lender or mortgage company for the premium. During the year you will probably pay as part of your monthly mortgage bill a small amount that gets placed in escrow to pay next years insurance premium and taxes. That's the T and the I part of Principal, Interest, Taxes and Insurance (PITI) that you have probably heard is included in your monthly mortgage payments.
Call us or email us for a quote. Let us know who your broker or loan officer is. We can get all the information from them to prepare a quote. They can also include a binder request to us so we can have the binder prepared and submitted way in advance of the closing date. This assures we have plenty of time to properly evaluate your new home for the property replacement value.
Call us now for a homeowner quote at 503-489-3143 in Gresham, Oregon.
Technology makes it easy for us to send a binder to your lender or mortgage company. Most finance companies, dealers, real estate brokers, loan officers and processors and closing or escrow officers will accept a faxed or emailed binder.
A binder differs from a policy declarations page, certificate, application or identification card in that the insurance company may not even know yet that the policy exists. Insurance companies contract with insurance agents and in that contract define a certain authority the agent has to obligate the company to insure a risk. This is called binding authority. It would be assumed that the insurance company has done its due diligence to investigate the professional ability to represent the insurance company out in the field or market place. Once the insurer is satisfied the agent knows the business, has the proper licensing and malpractice insurance in place, it will grant him or her the limited authority to declare a certain property, car, activity or event insured by the company. These properties, cars, activities, etc. are referred to as the risk. This action by the agent to issue a binder is called binding the risk.
The document the agent issues to the interested parties such as lenders, mortgage companies, finance companies, real estate agents and such is called a binder. It is a temporary contract that has very limited information about what is insured, for how much it is insured and by whom. The binder has a time limit. The State of Oregon grants insurance companies the right to cancel a policy if the risk the agent has bound does not meet the rules, guidelines and merits of acceptability by that company. It could be a mistake on the part of the agent not knowing the rules, purposely ignoring the rules or not knowing all the pertinent information about the risk to make a proper judgment before issuing the binder and accepting the risk on behalf of the insurance company. That is why the insurance company allows insurance agents to only issue a binder with a time limit of say 30 days. That gives the insurance company time to review the application and decide whether the risk is acceptable to them or not.
A binder is a big deal. The authority an agent has to issue a binder is a big deal and a lot of professional responsibility and should not be taken lightly. Your financial well being is in the hands of your agent. Your agent ought to be extremely familiar with what the insurance company he or she represents will accept. Fortunately, most insurance companies provide sophisticated software programs and websites that assist the agent in selecting the risk. The rules and guidelines of acceptability are built in to the programming of the website and if the agent fills in all the blanks properly, then very few mistakes ought to be made. These tools aren't 100% foolproof. The agent must still use extreme caution and analytical skill to decide where to place a risk.
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