Photo by:  Allyson Souza

Why you owe more at mortgage real estate closing than your down payment

The settlement sheet (HUD-1) 100 series numbers page 1 adds up what your charges are to buy the house:

  • sales price
  • closing costs from page 2
  • pro rations per the sales agreement.

Below that, the HUD-1 200 series adds up your credits to buy the house:

  • Your mortgage
  • Deposit(s) you already paid the seller
  • Seller credits
  • Lender credits

Below that your HUD1 page 1 subtracts your credits from your charges and the difference is what you owe!

Unless the seller paid ALL of the closing costs (they are limited to 2-6% seller credit so this may not be possible if you have very high property taxes for example) you will owe more than your down payment, you will also all the closing costs that the seller did not pay.

What you owe at closing should be fairly close to what your loan officer showed you in writing several times (signed 1003 application page 3, fee worksheet).


Photo by:  Tuğba Yüksel

Why is homeowner’s or hazard insurance included in monthly payment when paid first year on HUD-1 and GFE

Unless you are waiving escrows and requested that at the time of loan application (LTV less than 90% required and fee may be required) 1/12th of your future taxes and homeowner’s (also called hazard) insurance will be due each month as part of your mortgage payment.  In addition, the current year taxes and insurance must be paid in full at or before closing.

The monthly payments you are making will go into your escrow account to accumulate for the following year’s bills.  You will receive an Escrow Analysis at closing that will show exactly what your escrow account balance and disbursements are for the next 12 months.

Be assured a lender is not allowed to take any more than required to have a 2 month escrow cushion.  This cushion will cover the inevitable annual increases your taxing body and insurance company issue.

Here is a handy escrow calculator 

FHA Mortgage Appraisal tips

Pennsylvania FHA Appraisals – Current Requirements for PA

Appraisal Industry Standards you need to know and prepare in order to complete an FHA Appraisal Inspection in Pennsylvania:

 Preparation of Property

All utilities must be on. If the property is vacant and has been winterized the water valve must be in an “On” position in order for the appraiser to test at each faucet. If the water valve is shut off at street or basement level the appraiser will not turn on.


  1. Access to attic and or crawl space. The requirement is “Head and Shoulder” access in order for the appraiser to view and take pictures of this physical space.
  2. Access to all interior rooms and or units in the subject dwelling.
  3. Access including interior access to all out-buildings on the property. Out-buildings is defined as a standing structure located on property and detached from the subject property (i.e. shed, garage, barn, etc.)
  4. Well and Septic: Appraisers will try to determine the location of well and septic. If this information is not public record please provide a copy of any survey if one is on file.
  5. If any structural improvements have been done to the property provide permits of work.

If access to attic or crawl space is blocked the appraiser will not remove any obstacle blocking access. If water is turned off at street or basement level the appraiser will not turn this valve on. Both instances are items that should be prepared before the appraiser arrives. The appraiser will not assume responsibility in doing, due to personal liability.


Common Repair Items If Found Will Need to Be Addressed:

  1. Homes built prior to July 1978 may contain lead based paint. If the home has signs of peeling paint this is a mandatory repair.
  2. Active interior leaks
  3. Frayed or exposed wires
  4. All rooms that are habitable must have the capability to be heated to a minimum temperature of 55 degrees.
  5. Broken windows
  6. Structural issues / Cracks in Foundations
  7. Exposed exterior wood without painting, stain, siding, etc.

FHA Rates

biweekly mortgage

BiWeekly Mortgages?

A biweekly mortgage pays a 30 year loan off in 22.6 years.  It does that by forcing the borrower to make an extra monthly payment annually.  Just as when you are paid by your employer biweekly, every few months you are paid three times, instead of twice (because there are more than 28 days in a month), with a biweekly mortgage every few months you are paying it three times instead of twice.  In a year you will make a full extra monthly payment.

We find that if you just send in 1/12 of your monthly payment as an extra principal payment monthly, it is a lot less banking to manage then biweekly loans with 2-3 payments a month.

zero closing cost

Pennsylvania No Closing Cost (NCC) mortgage information

No closing cost mortgage tips and background information.  Break even analysis.

The No Closing Cost mortgage is becoming very popular in Pennsylvania.  It was started and the word was spread in 2006 by a large bank as a marketing idea to bring in new business as things were starting to slow down in the mortgage industry due to rates being up and the refinance boom being over.  Now, we are receiving calls for these loans every day.  But, we do not always recommend them and here is why: Continue reading Pennsylvania No Closing Cost (NCC) mortgage information

Photo by:  Pierre-Olivier Bourgeois

Should you consider financing closing costs, escrow reserves, or other cash needed at closing?

The first question we ask is, “How long do you expect to keep this mortgage?”  We will then determine a break even period for you.  That will tell us how many years (to the month) it will takes to break even for paying more money at closing to obtain a lower rate. Continue reading Should you consider financing closing costs, escrow reserves, or other cash needed at closing?

Calculate Net Check Amount from Selling Real Estate.

Calculate Net Check Amount from Selling Real Estate.

Fine tune the Estimate or Preliminary HUD-1 real estate agent gives you.

How much can you expect when you sell your home?

At closing, the seller, will be presented with a universally required 2 page HUD-1 statement. There are 2 columns on it, the “buyer’s side” (left) and the “seller’s side” (right) .
Continue reading Calculate Net Check Amount from Selling Real Estate.