I just got through paying about $4,100 for 1 year of property taxes & insurance out of my escrow account w/ Chase Home Finance. $2,700 was taxes & 1,400 insurance. Every month I'm paying in about $386 to this escrow, so by next December I'll have enough to pay taxes & insurance again. So I get this HUD statement for my refinancing & they show me paying 15 more months of taxes & insurance that they've added to my loan balance (not the escrow). Is this normal? This means that if I keep making my monthly escrow payments, the 15 months I'm paying on this close really wouldn't even be used until December 2011. And if it's for taxes & insurance, shouldn't it go into the escrow & not on top of my loan balance? I went into this refinancing owing $84,347 in principal, & the HUD statement shows me owing $92,324 after it's done(difference of $7,977). Included in the $92,324 is $1,548 for FHA MIP/VA Funding - US DEPT OF HUD. Not sure who to trust, but they told me by paying this in a lump sum, I would no longer be charged for the mtg insurance monthly. I knew up front I was going to be paying about $2,500 in closing cost for the refinancing that included application fee, title & processing fees. The loan officer who took my $750 non-refundable application fee assured me these were all the cost. Obviously that wasn't the case. Oh, & when I questioned him about the large amount on the intitial settlement statement (over the principal balance), he told me it was because they were adding the escrow back in and they would turn around and reimburse me after the closing. Can someone tell me about these taxes & insurance amounts they are adding to my loan balance? Is this the way these are supposed to be handled in a refinancing?
On the 1548, you pay a one time mortgage insurance premium as part of owing more than 80% of the value of the home. That is not the monthly mortgage premiums that will collected as part of your escrow. From what I can tell, they are collecting a full year + 3 months because they are assuming you have not paid your taxes for this upcoming year. 3 months is the standard gap for the escrow account, so that makes sense and your escrow account would be overfunded by a full year worth of taxes and insurance. It looks like the escrow money and Mortgage Insurance Premium is what gets you from owing essentially $2500 to $7977. I assume you are rolling in all closing costs.
You are not exempt. FHA loans have MI for a mandated period of time before it can be removed. If you are rolling your escrow in and not paying it out of pocket, it is added to the principal (the 12 months) and then paid to the taxing authority. Not to intrude, why are you doing an FHA? If no credit issues, you should do conventional and avoid the MI plus the funding fee. mammy
I did it through FHA 2 years ago when I bought the house. At the time my credit was not good & neither were my options.
Maybe I am not seeing it but that does not say why you are doing it now. It seems to me you are not getting 100% of the picture from your mortgage guy. Without know more info it is tough to say anything for sure but you have some things to your advantage. Post here, send me a PM or email me at robert@buffingtonmortgage.com I am happy to answer your questions.
The reason I was doing it now is because the Chase guy told me my total cost would only be $2445 & he guaranteed me an interest rate of no worse than 5% (I ended up getting approved at 4.5). My current note is 6%. I had figured that if I paid it out over 15 years, it would save me about $10,000 in interest, so I thought it was a good deal. He also stressed how "seamless" the process would be, & that I'd only have to sign a few documents, it would be done in a month or two, etc... This was last June. And to answer your question Bernard, at this point I will either just leave it alone or go the conventional route with a local bank. Thanks for answering my questions.
you should get some of your initial funding fee back but you will still pay a portion of a full FHA funding fee that will be rolled into your note. The problem is many in the business do not disclose this as a closing cost (technically it is not). My guess is your approx. $2500 in closing costs should have the funding fee added to it. Also, I cannot understand why he is giving you a range of rate and why it is taking this long to close. With what you are doing, an FHA streamline is pretty quick. Should be no more than 30 days. Lot's of red flags here. Good luck mammy
