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Danno, Home Buyer in Ormewood Park, Atlanta...

How much is usually collected as pre-paids at closing for tax and insurance?

Asked by Danno, Ormewood Park, Atlanta, GA Sun Jun 28, 2009

I expect to pay one year up front direcly to the insurnace company and 2-4 months of escrow for the taxes and following year insurance. My mortgage broker is asking for 14 months of escrow payments up front plus the one year pre-paid insurance. Is ta tnormal practice? I don't recall this much pre-paid escrow on prior homes I have purchased.

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Scott Eaves was right on the money as to how the escrow is collected.
0 votes Thank Flag Link Mon Aug 17, 2009
If you are buying in Ormewood in the next month, one reason the pre paids seem high is that Atlanta taxes were delayed in coming out, and the actual payment of them has been delayed til mid September.

This is because the city adjusted millage rates to compensate for the decrease in home values, but still collect enough to keep the government solvent. It's just another way the economic down turn is affecting everyone, even those whose livelihood has not been interrupted.

Your lender should be able to tell you how much will be contributed by the seller. Make sure the taxes are calculated on the current 09 bill, which may have been released in the last week.
0 votes Thank Flag Link Tue Aug 11, 2009
Danno,

Aaron is right.....plus, as we get closer to property taxes being due (usually in the Fall), lenders have to escrow enough money to pay a year's worth of taxes plus a cushion. At closing, the seller will pay his portion of the taxes which will appear as a credit to you. However, the lender will have to collect enough from you to pay the upcoming tax bill. In conclusion, the seller pays his portion to you, you pay the lender (prepaids/escrows) and the lender pays the tax bill. So, it may sound like a lot of money is being collected, but the seller is paying his part as well. The best person to question is your lender. They should be able to explain to you what they are collecting and why.
0 votes Thank Flag Link Mon Jun 29, 2009
Your prepaid amounts going into the escrow account are based on a table that indicates, based on which month we are in, how many months are to be deposited into the escrow account. So the number of months to be paid should be standard, but the answer will just vary depending on the month you are closing.
Web Reference: http://www.H2realty.com
0 votes Thank Flag Link Sun Jun 28, 2009
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