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Message
Question about Mortgage
Posted on 12/27/16 at 4:00 pm
Posted on 12/27/16 at 4:00 pm
I have a pre approval for a mortgage
My total closing cost are reasonable, which comes to about 1.2 % of my loan.
After that i have the total prepaid expenses. Even though I'm paying the 20% downpayment, my lender is requesting Pre-paid expenses that include:
1- an escrow homeowner insurance of 2 months for total of 250$
2-escrow taxes for 6 months which comes to 1500$
3-escrow 1 year home insurance of 1500$
total pre-paid expenses are 3266$ in addition to the closing cost.
Are the prepaid expenses reasonable?
Can it be negotiated?
thanks
My total closing cost are reasonable, which comes to about 1.2 % of my loan.
After that i have the total prepaid expenses. Even though I'm paying the 20% downpayment, my lender is requesting Pre-paid expenses that include:
1- an escrow homeowner insurance of 2 months for total of 250$
2-escrow taxes for 6 months which comes to 1500$
3-escrow 1 year home insurance of 1500$
total pre-paid expenses are 3266$ in addition to the closing cost.
Are the prepaid expenses reasonable?
Can it be negotiated?
thanks
This post was edited on 12/27/16 at 4:54 pm
3
Posted on 12/27/16 at 4:28 pm to Northwestern tiger
quote:
Are the prepaid expenses reasonable?
Probably are. It depends on how much your property taxes are expected to be and the cost of your homeowners insurance.
quote:
Can it be negotiated?
Not really but you can appeal the amount of your property tax. I have done that from time to time with some small success. You can also shop around for homeowners insurance.
Your escrow account will be reviewed at the end of the year and adjusted up or down depending on the next year's estimated costs. If you pay too much escrow in any one year you get a credit the next year. It is not like once you pay it you lose it.
Posted on 12/27/16 at 4:40 pm to Northwestern tiger
yes. ive never met a lender who didnt. i think you mean HOA vs collecting for insurance twice?
Posted on 12/27/16 at 4:50 pm to ItNeverRains
quote:
ive never met a lender who didnt.
who didn't ask for pre-paid expenses?
quote:
i think you mean HOA vs collecting for insurance twice?
i think they want to have the money for insurance and taxes in advance
Posted on 12/27/16 at 4:52 pm to PlanoPrivateer
quote:
If you pay too much escrow in any one year you get a credit the next year. It is not like once you pay it you lose it.
so does that mean, the home insurance fees and the taxes will be reduced from my total mortgage monthly payment, and will be paid separately?
Posted on 12/27/16 at 5:00 pm to Northwestern tiger
First off, if you are making a downpayment of 20%, ask if you can get out of escrow.
The one year insurance amount is basically the cost of homeowners insurance. With a mortgage it is typically paid annually in advance. Then you pay to the escrow each month so at the end of the 12 month period, there is enough to pay for another year.
The 2 months escrow for insurance is to give you a buffer when it comes time to renew the policy.
The 6 months escrow for tax, again, is to collect money to pay property taxes at the end of the year. 6 months seems high... especially if you are closing early in the new year, as the taxes have likely just been paid. You may be able to negotiate this down to 3 months, but it's probably a company policy to collect 6.
No. You will pay these amounts monthly, and they will sit in a holding account until they are due to the respective companies/tax authorities.
The one year insurance amount is basically the cost of homeowners insurance. With a mortgage it is typically paid annually in advance. Then you pay to the escrow each month so at the end of the 12 month period, there is enough to pay for another year.
The 2 months escrow for insurance is to give you a buffer when it comes time to renew the policy.
The 6 months escrow for tax, again, is to collect money to pay property taxes at the end of the year. 6 months seems high... especially if you are closing early in the new year, as the taxes have likely just been paid. You may be able to negotiate this down to 3 months, but it's probably a company policy to collect 6.
quote:
so does that mean, the home insurance fees and the taxes will be reduced from my total mortgage monthly payment, and will be paid separately?
No. You will pay these amounts monthly, and they will sit in a holding account until they are due to the respective companies/tax authorities.
Posted on 12/27/16 at 5:03 pm to LSUFanHouston
Awesome
Thanks for the explanation!
Thanks for the explanation!
Posted on 12/27/16 at 9:10 pm to Northwestern tiger
You can shop insurance and choose whatever agent gives you the best deal. The taxes are estimated based on purchase price and ultimately the figure set at closing will come from title company handling the closing. If 6 months is required then seller will credit to you their portion of the taxes they owe for the part of the year they owned the house
Posted on 12/28/16 at 8:12 am to ellesssuuu
Your property taxes are due at the same time every year generally no matter when you close on your house, usually in November. So if you close in May the bank will pay your next years taxes in November, so they just want you to prepay your first years' taxes at closing.
If you overpay or are 6 months ahead at some point, they will either adjust your mortgage, give you the money back at that time, or both.
If you overpay or are 6 months ahead at some point, they will either adjust your mortgage, give you the money back at that time, or both.
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