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Hello, I’m very confused on the homeowner’s insurance in the “estimated Taxes, Insurance, & assessments” section of the LE & the CD on construction loans. AT the present time, we are checking the “homeowner’s Insurance’ box but in the prepaid section(F) we are adding the “builder’s risk” and putting in an estimated premium. Other people tell me that they just leave the “homeowner’s insurance mark and don’t put in the builder’s risk in the (F) section. Other say they mark the “other” box and put in builder’s risk.
I will do it which ever way is the correct way or the best way.
Also, we require insurance but sometimes there are loan officers that do not require it to paid before closing because no construction has been done on the home yet. When this happens I type in builder’s risk insurance in the Section (F) and mark it as POC. All I have to put in there is an estimate.
I have called insurance companies and they tell me that most people go ahead and get homeowner’s insurance. Also, do I use the monthly premium of the builder’s risk insurance or the homeowner’s (which ever one they get) in the estimated taxes section or do I tried to estimated what the premium would be when the house is finished. The bank using the construction cost plus land has the value they approve the loan on, when preparing the closing disclosure do I use the value that the bank used to approve the loan or do I used the appraised value from the appraisal as the appraised value. Usually the pre-construction appraisal is higher, I’m confused about which one to use.
Please help me out. Is there a problem with some loan officers getting the proof of insurance before closing and some telling the customer that they can wait until construction begins.
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