Is the homeowners insurance for a construction loan supposed to be in the prepaid section on the LE and CloD? This is for situations where the borrower does not have any homeowners insurance in place, and is required by the bank. Would we show the estimated amount on the LE and then on the CloD show the actual amount, and whether the borrower has paid before closing? This is how we handle purchase money loans. Thanks for any information.

Depends. If you require them to have insurance in place prior to the loan being booked, then yes. Typically on construction lending the builder's risk insurance will cover the property during construction.

On owner built construction loans we do require they have insurance in place. Thank you for the information Randy.