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FHA Closing Costs - Question
I'm hoping someone here can explain this to me.
Our seller has agreed to X amount towards closing, which should cover all but $200 of our final closing costs including prepaids. In addition our REA is bouncing back a 1/4 of her commission to us due to the Homes for Heroes program which will cover the remaining. We are working with a FHA loan thus the seller's closing concessions and our REA's commission can be applied towards prepaids. One prepaid is obviously our home insurance for year 1.
To close I know we need our homeowner's insurance in place. How does this work if seller's funds are going towards it? Do we lay it out, it gets written into the GFE and we get it back at closing? Or since we supplied our insurance agent's contact info to our LO, does it all go through them? I have a call out to our LO but due to it being after 5 I doubt I'll hear back from her today and I'm just trying to get this straight in my head.
Any explanations would be greatly appreciated. Sometimes I feel like I'm learning a whole other language just to get through this process!
October 13, 2012
Re: FHA Closing Costs - Question
Your GFE is for the life of the loan, not just a single year. So if you're escrowing taxes & insurance, your GFE needs to reflect the other 29 years and include the cost of insurance. The insurance in your monthly payment (as opposed to the prepaid) pays year 2 and forward. It's paid out once a year by your mortgage company to your insurance company.
Your question seems to be about how the insurance company actually gets paid and the answer to that is that the title company wires the funds to them immediately after closing. The insurance company neither knows nor cares whose pocket the funds came from, just that they got paid.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
October 13, 2012
My Pinterest
The Googlesites Paint Bio
Thinking of doing cosmetic updates to a dated home? These were our costs.
October 13, 2012