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So when do you get back the money that you paid for the first years insurance?
Ahh...no...you never get it back. As long as you keep the house and don't cancel the insurance policy early, you're not going to get any refund.
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Originally Posted by so954
Do you also have to do this with property taxes?
Yep. Unless the mortgage company allows you to pay taxes and insurance on your own--and not through an escrow account--you're going to need to pay extra each month on your mortgage to cover future tax and insurance payments.
So when do you get back the money that you paid for the first years insurance? At the end of the loan? When you sell your house? never?
Seems like you are paying for the first year, and also paying insurance each month.
As far as car insurance, I don't pay a year in advance. I pay it monthly.
Insurance is always paid in advance (pre-paid). Home owner's insurance policy periods are one year.
Let's say you are closing on 06/01/2015. You will pay 1 years worth at closing 06/01/15-06/01/16. The 1/12th that you mortgage servicer collects monthly is so they can have enough in the escrow account to pay the next year's bill when it comes due on 06/01/16. They are holding that 1/12th monthly, not paying it out each month.
If you were to sell some year in December, you would get a pro-rated 1/2 year refund from the insurance company because they already collected for a full year. AND you would also get an escrow refund for all the 1/12th payments that went into your escrow account that has not been paid out yet.
I don't have an escrow account.
I pay my property taxes and insurance myself.
Why let the bank make money on your money?
Some banks charge 1/4 point for not establishing an escrow account for property taxes. In MA anyway, they can't make you buy their insurance, so they don't charge points if your insurance isn't through escrow. We had pay up front at closing as well. We had the option to be billed monthly instead of the whole amount, but we have an existing policy under another home.
Some banks charge 1/4 point for not establishing an escrow account for property taxes. In MA anyway, they can't make you buy their insurance, so they don't charge points if your insurance isn't through escrow. We had pay up front at closing as well. We had the option to be billed monthly instead of the whole amount, but we have an existing policy under another home.
Sure.
Some banks might do that.
I still encourage people to find out who does what and shop around.
We didn't have to do anything like that.
So when do you get back the money that you paid for the first years insurance? At the end of the loan? When you sell your house? never?
Seems like you are paying for the first year, and also paying insurance each month.
As far as car insurance, I don't pay a year in advance. I pay it monthly.
You never get the money back until you pay off the loan or are no longer required to have escrow. It is not a deposit. It is a payment for year 1 of the insurance costs. The monthly amount you send in with your mortgage is used to pay year 2, year 3, etc. You are paying it forward. When you pay off the loan if there are extra funds in the escrow account you will receive a check several weeks after the loan is paid off.
You have to give them the entire cash payment meant for the entire year?!
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