Don't Understand Closing Costs Estimate (agent, mortgage, mortgage, insurance)

[dollerprod]

This was sent to me with a preapproval letter. I don't understand what is contained in the "Prepaid Items" section at the bottom-left.

If these are factored into my monthly mortgage payment, and I am prepaying for some portions of them in this first year, are they still included in my first few months payments? I pay the first years' homeowners insurance in advance? What is the Hazard Insurance Impound fee? I just don't get this section in general...

Tried calling to ask this and I guess the person I have been dealing with is on vacation, so thought to post this to figure it out.. So since you are already looking at the breakdowns of all these items- does anything stick out? As a first time homebuyer I have no idea if this estimate would be considered fair. I have marginal credit and am in Central Florida.

[davebarnes]

Interest 15 days - interest is calculated from the 1st of the month so this number of days is always dependent upon your closing day-of-month.

Hazard Insurance - you pay one year in advance

Hazard Insurance Impound - 3 months is the nervous bank's "insurance" in case it increases next year

Property Tax Impound - 4 months is is the nervous bank's "insurance" in case it increases next year

Sadly, these are all normal.

Personally, I find the $1500/yr on a $200K house for hazard insurance to be insane, but then, we have very few hurricanes in Denver.

[Electrician4you]

This^^^
Btw welcome to homeownership. Congrats on your house

[Rakin]

Originally Posted by davebarnes

Personally, I find the $1500/yr on a $200K house for hazard insurance to be insane, but then, we have very few hurricanes in Denver.

Keep in mind it's only an estimate that might be on the high side.

Better high then low.

[Okey Dokie]

Also keep in mind if you close mid month, your first mortgage payment isn't due for 6 weeks after that, i.e, close on March 15, first mortgage payment not due until May 1.

[TexasDillo]

Those look like normal charges that are collected in advance and held in escrow. About this time next year, you'll receive a revision notice that will reflect any changes to these charges and how much they will impact your monthly mortgage payment.

[DMenscha]

I'm blown away by the title/recording charges. Looks like the governments (Local and State) in FL don't miss much there.

The previous posters gave an excellent outline of the prepaid items.

Congrats on your new home.

[SOON2BNSURPRISE]

A year from now you won't even have any of this on your radar. Welcome to home ownership. Now the real fun begins. LOL

[dontaskwhy]

I suggest that if you have any questions about the closing statement, you could contact the title agent (not the realtor) for clarification.