Question by Lillian: Refinancing a Mortgage – Insurance/Taxes?
When I purchased my home, the following year’s taxes and insurance premiums were included in the closing costs. What happens to these payments when I refinance? In other words, do I have to pay a year’s worth of taxes/insurance again and get a refund for what I have already paid? Or are these fees waived when you refinance since I have already paid for the next year? I’m trying to estimate what my closing costs would be to refinance…
Answer by falsi fiable
You will have to pre-fund your escrow account for taxes and insurance. The pre-fund amount is typically 4-6 months worth of escrow payments.
You will also get a refund of your OLD escrow account within 30 days after refinancing.
Your lender gives you a 1/8 to 1/4 percent rate discount by using an escrow account.
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