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Answers (9)
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
Your correct Joe. Thank you for bringing this to my attention. ... Happy funding, Rudi
- Clay Branch, "Georgia Loans"
- Contributions:7836
I am glad the op didn't ask me what an excrow is, although I googled it and there are many threads about it...my answer is now in there somewhere, LOL!
Since I used 2 eyes this time and see it is a purchase, split billing, I think you will need 10 months escrowed . I am thinking 6 months will be collected in Dec, then 6 more in April. If you close in Sept the first payment is Nov 1 and if you escrow 10 months at closing, there will be 12 months in escrow when they pay out 1/2 the taxes ( 6 months ) in Dec leaving 6 in your acct. Then, you will make 4 more payments bringing the balance back up to 10 months when they pay out the other 6, leaving 4. The reason you need a few more months over and above the actual taxes is due to cover if there is a reassessment of the home value ( higher ) resulting in a higher tax bill. Even though you may pay 10 or 11 months in prepaids at closing, the seller pays the prorated portion from Jan - Sept which will be a credit to you to offset your expense.
Since I used 2 eyes this time and see it is a purchase, split billing, I think you will need 10 months escrowed . I am thinking 6 months will be collected in Dec, then 6 more in April. If you close in Sept the first payment is Nov 1 and if you escrow 10 months at closing, there will be 12 months in escrow when they pay out 1/2 the taxes ( 6 months ) in Dec leaving 6 in your acct. Then, you will make 4 more payments bringing the balance back up to 10 months when they pay out the other 6, leaving 4. The reason you need a few more months over and above the actual taxes is due to cover if there is a reassessment of the home value ( higher ) resulting in a higher tax bill. Even though you may pay 10 or 11 months in prepaids at closing, the seller pays the prorated portion from Jan - Sept which will be a credit to you to offset your expense.
- Joe Cafiero, "Joe Cafiero"
- Contributions:3221
Rudi...how do you figure that only 2 months are going to be set aside for his tax escrows when the a tax is due in Dec and he would only have made at best 1 payment.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
On a normal owner occupied-purchase or refinance, 2 months PITI is required and if applicable, plus 2 months HOA fees.
These are not part of your closing costs. It's a requirement to receive the loan. You need to document that you have these reserves.
If you meant and Escrow Impound Account, that would be part of your Settlement Fees. Usually, this is 2 months of your taxes and homeowners insurance.. .... Happy funding, Rudi
These are not part of your closing costs. It's a requirement to receive the loan. You need to document that you have these reserves.
If you meant and Escrow Impound Account, that would be part of your Settlement Fees. Usually, this is 2 months of your taxes and homeowners insurance.. .... Happy funding, Rudi
- Meg Russell, "GreenBrokerMeg"
- Contributions:16
Cash reserve requirements are quite a different animal from escrow deposits. I would make sure your lender is talking to you about one or the other and which. For cash reserves, lenders are looking for a bank account with somewhere from 3 to 6 months of the mortgage payment in it as a safety net. For escrow deposits, that will be calculated as part of your closing costs and can be financed and not directly related to how much cash you have on hand after your down payment. The number of months of tax escrow depends upon when the next tax payment needs to be made. Hope this helps!
- Joe Cafiero, "Joe Cafiero"
- Contributions:3221
They will most likely collect the whole payment due in Dec plus an extra month or two
- wetdawgs
- Contributions:26830
Our lender commented it depended on when the bills were due. Insurance tends to be paid annually, so that is easy. Tax bills in my state have April and November payments. The escrow account is supposed to have sufficient money to pay the bill when it is due.
- Jay McGovern, "jaymcgovern"
- Contributions:90
I'm in North Carolina and it's about six months on a purchase + part of the month from when you buy until the end. Insurance would be one year + 3 months.
- Clay Branch, "Georgia Loans"
- Contributions:7836
Is it a refi or purchase, when are your taxes paid each year? Whatever your current excrow is, you can add about 2 months to it for an estimate.
How many months of reserves are usually required in closing costs?
BofA told me 3 months, a boroker told me 8 months. Which one is closer to the truth or does it vary by lender?
For a purchase, taxes are due in December and April.
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