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
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.
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
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?
Should you take a 1st and 2nd combo mortgage? Calculate the blended, or effective combined rate of two loans here.
Continue reading Pennsylvania…Eliminating Private Mortgage Insurance