Homeowners Insurance
A lender may require insurance coverage to be effective at closing.
You may pay a premium in advance.
That money isn't simply a lender fee. It buys insurance coverage.
Property Taxes
Depending on timing and escrow arrangements, funds may be collected or adjusted for taxes.
Prepaid Interest
Mortgage interest is generally paid in arrears through monthly payments.
At closing, interest may be collected for the period between funding and the beginning of the first regular payment cycle.
Escrow Reserves
If your lender establishes an escrow account, it may collect money at closing to begin funding future taxes and insurance.
Why Closing Date Can Affect Prepaids
The day you close can affect the amount of prepaid interest and other prorations.
But don't choose a closing date solely to manipulate one line item without understanding the full transaction.
How Lisa Helps
Lisa helps you look at the transaction as a whole rather than chasing a single line item.
Your lender and closing professionals provide the official prepaid and settlement figures.
