Unusual payment

John A

New Member
1
I am buying a home . The yearly homeowners and flood prices were quoted to me . I signed the papers showing the price for the year. The agent wants the whole year payment up front ...AND still pay monthly with the mortgage so essentially paying it twice.
I have bought a house before and this was not the way it was done . Anyone have some insight ?
 
Did you ask the agent why?

It could be something nefarious, or it could simply be a misunderstanding. I will admit as you say it, it doesn't make much sense to me.

Maybe the homeowner's is going to be escrowed, but you need to pay the flood out of pocket? Perhaps there is an issue with the escrow account and having enough to pay the policies initially? I do know the mortgage company collects in advance to pay, so if there isn't enough to pay now, you would need to. That said, generally the full premium is factored into the closing costs.
 
That's kind of how it works. You or the mortgage company pay a year up front and then you pay a little more in with your monthly payment and Voila, after 12 months they pay another year for you. You pay up front because most lenders want it paid up front now. It doesn't matter if you write a check or it's rolled into closing costs and you bring a check to close, it's all paid up front. Except flood. That is paid yearly and rarely escrowed.
 
You are paying the mortgage company monthly for the Homeowners insurance for next year. They are collecting now monthly so they have the approximate amount to pay your carrier next year at renewal. it is how all lenders handle it when they force your home insurance & property taxes to be collected in Escrow. You are also paying the same way for Property taxes. They collected this years pro rata amount at the closing & you are paying monthly so the lender has the money to pay the property taxes when the tax bill comes
 
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