You commonly discuss prepaid items with your lender as soon as you’re about to sign the contract for a mortgage. These are different from fees. These are costs associated with your real estate property that needs to be cleared in advance when you’re applying for a loan.
So before closing the deal off with a mortgage company here in Maryville, it would be best for you to know your mortgage’s breakdown so you won’t get caught off-guard.
These are costs that are related to the home itself. Your lender may require making these payments before their due date comes in. You may continue to pay these costs throughout your loan’s lifetime, or as long as you own the home.
Real State Taxes
You pay local estate taxes to local counties and municipalities in the U.S. It may vary depending on the process of assessing the property’s value or even the county’s jurisdiction.
This is the interest charged on a loan used to purchase the property.
Home Association Dues
Home association dues are dues paid by each homeowner within the community to maintain amenities such as pools and recreation areas.
Private Mortgage Insurance Premiums
The charges paid by homeowners for FHA loans that can be deducted the same way as home mortgage interest. Private Mortgage Insurance (PMI) protects the lender from any financial shortcomings in case you failed to make your mortgage payments.
Hazard Insurance Premiums
You may also be paying hazard insurance premium in the first few months of your loan. The money that you’re paying for goes toward an escrow account, which is commonly set up by a third party. Your lender will then pay it to the insurance company on your behalf.
These are just some of the few items that you need to consider when applying for a loan. It’s always advisable to get in touch with your lender to ask for any advice regarding prepaid items.