Say you were to close today the closing statement would say collect 5 months of property taxes for escrow (No credit back from the seller) because your first mortgage payment wouldn't be due til May 1 (with a grace period to May 15, taxes due are for April, May & June). The mortgage company would send out the property tax payment (3 months) in April (prior to the due date) leaving them 2 months of reserves.
Say you were to close two weeks from today (April 7) the closing statement would say collect 2 months of property taxes for escrow (but you would probably get a small credit back from the seller as well, a week of taxes) because your first mortgage payment wouldn't be due til June 1 (with a grace period to June 15). The mortgage company would send out the property tax payment (3 months) in July (prior to the due date, taxes due are for July, August & September) leaving them 1.25 months of reserves.
The amount of escrow collected at closing can not exceed a certain limit per RESPA regulations. That amount is influenced by the amount of prepays that are collected (interim interest as well). So Thomas there is no exact answer, so since it's better to figure high than low I suggest calculate 5 months of tax escrow and hopefully you will be pleasantly surprised.
Amber is correct but it is always best for your lender to provide a Good Faith Estimate so there are no surprises. Some lenders may require you to pay 1 year homeowners insurance outside of closing (before you close). Also, depending on what day of the month you close your pre-paid interest will change. If you close early in the month the interest will be more than if you close late in the month.
As far as how much property tax is held in escrow.....that also depends on what month you close. If you buy your home close to when the quarterly taxes are due they may hold more in escrow to anticipate paying the taxes and still having reserves. On the flip side, if you buy your home just after the quarterly taxes are paid they may hold 2-3 months.
I hope that helps.
626 Route 9 South
Freehold, NJ 07728
Required escrow "reserves" vary from state-to-state.
In the state of NJ you can expect to need approximately 3 to 4 months worth of escrow monies upfront at the time of your closing/settlement.
These funds will include principal (meaning amount of money you borrowed for the mortgage divided by 365 months for a 30-yr mortgage) plus monthly interest on the mortgage, home owner's insurance, PMI (private mortgage insurance fee if you put down less than 20%), taxes, etc.
If you are already in the process of purchasing a home, whomever you are getting your mortgage through should be able to provide you with a GFE (good faith estimate). This is a "checklist" of costs associated with your purchase of whichever home you choose. A GFE should give you a good guage of how much money you can expect to pay out at closing. Just ask your loan officer for a copy of it.
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All the best,
Weichert, Realtors (Marlboro~ Manalapan office)
455 Route 9 South
Manalapan, NJ 07726
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Take the yearly property tax on the property and divide it by 12. This figure is added into your monthly mortgage payment - but it is held by your bank in escrow and they pay out your various school and local taxes for you. If you put down 20% you can pay these yourself - but your bank will charge you a higher interest rate.
Same things for Mortgage Insurance (PMI). You will have this if you don't put down 20%. The amount of PMI depends on the amount of the mortgage and your credit, etc.
So ... your mortgage payment will be Principle + Interest (P&I) - this is your real morgage. PLUS taxes PLUS PMI (unless you put down 20%).