3 days away from closing! Quick question!

I am 5 days away from closing the SS. I got an approved copy of HUD-1 from my lender for review and I have the following questions! I appreciate if you answer them separately as well.

1- On page 2 of HUD-1, (section 1100 Title charges). I am responsible to pay $1500 in title services and lender's title insurance. and $960 in Owner's title insurance.  Now do i have to pay these fees? are they optional ? can i avoid them? please explain .

2- Someone told me that if i close on Feb 18 then I will make the first monthly payment on April 1st.  Now what about March? I am not responsible for March? I couldnt find any statement on HUD-1. But I am required to pay daily interest from feb 18 to 1st of march.

3- Also in HUD-1, (section 1001 Reserves deposited with lender). The lender asked me to pay 2 months of taxes and Home insurance in advance ($701).  But again in section 1305. I am Paying the 2nd installment for county taxes for 2012/13 for about $1700. Now isn't it redundant to pay the entire 2nd annual installment  and then 2 months of county taxes as well.

I will highly appreciate your help at this point..

Views: 161

▶ Reply to This

Replies to This Discussion

Permalink Reply by Bryant Tutas on February 12, 2013 at 12:26am

Hi Moe.

1. The purchase contract will dictate who is paying for title services. There are 2 different title policies. The owner policy is insuring free and clear title form the current owner to you. This is a seller charge in my area. The lender title policy is insuring the property from the new owner(you) to their lender. This is normally paid by the buyer. Review your contract. That's where your answer is.

2. Mortgage payments are paid in advance. Your March payment is for February interest. At closing your lender will collect interest form you for day of closing until 4-1-2013. So you are paying for March. It'd judt it'sd being collected at closing. Your first payment would be 4-1-2013 if you close in February.

3. Property Taxes are normally paid in arrears (after the fact). There for if you close on 2-18-2013 you would credit the Seller for the period 1-1-13 to 2-18-2013. Then your lender is collecting 2 months in advance for taxes and insurance. These bills will not be paid until the end of the year. Your lender is making sure they have the money to do so. Any overages in funds would be given back to you.

I hope this helps.

Permalink Reply by Moe on February 12, 2013 at 7:00pm

Thanks Bryant.

Permalink Reply by Gab on February 13, 2013 at 5:54am

About property taxes, so it is better to purchase a home in the beginning of the year to avoid a huge credit amount to seller,correct?

Permalink Reply by Simon Campbell on February 13, 2013 at 2:33am

Title insurance is a necessary expense in the purchase of a home. It helps insure that the title of your property remains clean and transferable.  On a HUD sale, the buyer pays for both policies. You may be able to wrap these expenses into your loan amount. You would have to check with your lender.

If you do not need to pay until April 1st, you will still accrue interest during March.  You could make an extra payment during March if you really wanted.

If there is are taxes owing on the property, they will need to be paid at closing. HUD will pay for their prorated share up to the closing date, you will pay for the rest.  Then, they will want you to put in escrow two months worth of future tax payments. This is to keep the taxes current in the event that you default on the loan.

Permalink Reply by Moe on February 14, 2013 at 7:40am

Thanks Brian,

So we signed all the docs and we had to pay the title insurance and the owners title was split 50/50. For february we paid interest per day for remaining days and you are right we have an impound account.

So is impound account a good thing ? what are pros and cons?

RSS

Members

© 2024   Created by Short Sale Superstars LLC.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************