Why will I need 4 months taxes for my new escrow account?
The title company will collect what they collect and I have no say nor does any other Loan Officer of what that number will be. They don’t have to be paid until September but they are due in June, so there must be 6 months taxes in the account by June. If you close in January, your first payment is March 1st so that means only 4 months will have been paid into that escrow account by June plus the lender will want at least 2 months’ reserves. So figure at least 4 months will be needed and not 8. Make sense? We can further clarify with the title company once we’re further in the process to make sure we’re as accurate as possible.Once we have your payoff from your current lender I can plug that into the Good faith estimate and then we can be very accurate with what you’ll need at the table.

If you owe 435 and you close on January 25th, you will need to add interest from the 1st through the 15th to your 435 AND you will be bringing interest to PRE PAY your new lender from the 25th to the end of January AND all of February’s interest for the new loan. That’s why your first payment isn’t until March 1st. Also, the title company always collects for about 10 days of interest on top of that as a cushion which you get back if they didn’t need the cushion for some natural catastrophe that occurred and therefore docs couldn’t be delivered.