Posts: 8,821
Registered: ‎03-06-2010
Re: question about closing and mortgage payments

amaurym wrote:
have a few questions that I hope you can answer.

1. Paying the home owner insurance in full for a year will save me on the policy. So if I do that will remove it from my monthly mortagege payment. ?Generally, an FHA loan requires escrows. You pay your full insurance policy up front for a year. At the closing in addition to the 12 months for the full payment, the servicer will collect another two months for your escrow account. You pay 1/12 of the amount of the ins policy each month with your payment and next year the loan servicer will pay another annual insurance premium for you about 45 to 60 days in advance of the due date.

2. If a portion of taxes and homeowner insurance is collected as closing to put in a escrow account. Will that mean my mortgage payment will be less for x amount of months. ? No, the full payment is collected (principal, interest, taxes, insurance and MI). It is not reduced for the upfront portion collected. The upfront portion is regulated so that the servicer can't collect too much. You will probably see an 'aggregate adjustment' on the HUD for any amount over the allowed amount. The allowed amount is the maximum cushion the servicer can hold.

3. Its there a charge for keeping the escrow account? If yes can I instead pay the taxes when due and keep the tax money on a high yield savins account until the time comes to paid the taxes. There is no charge to hold escrow. I have seen charges to waive escrows on conventional loans with low LTV's.

4. Same as hoa dues, can thy be paid when due and be keep in a high interest saving account. Hence I will earn interest on that money.You pay your HOA fees separately directly to the HOA. It is shown in your payment because it is part of the total housing costs, but the servicer does not collect your HOA fees.

5.  What is UFMIP finance. ? As stated in the response above: Up Front Mortgage Insurance Premium. FHA has two MI charges: upfront usually rolled into the loan and monthly.

6. PMI is only required until 20% of the original loan is paid.(106,000). I'm correct? So if the market price decreases/increases won't affect or will it. So if gain enough equity I can request for PMI can be dropped?? Actually MI drops off of the account when your loan to value is paid down to 78% (not 80%) of the original loan or five years whichever is longer. There are other requirements, like you can't have had a late mortgage payment within X months before it drops off (IIRC its 12 to 24 mths).