Buyer prepayments and escrows closing costs worksheet
Below are the typical prepayment and escrow closing costs for a residential home buyer borrower (excluding title costs and loan prorations). Use the form as a worksheet to calculate your prepay and escrow lending costs by adding and totaling your estimates in the Estimate $ column. Use the linked calculators and the provided pro-rata formula to obtain estimates.
Many lenders want to avoid a borrower having to come up with a large amount to pay for annual expenses when they are due. They, therefore, require their borrowers to pre-pay these expenses into escrow in monthly installments, so that when they are due, then the full amount of money will be available, and the borrower will not under pressure. Property taxes and insurances are the most significant pre-payments that can increase monthly loan payments. These inflated payments are referred to a PITI payments (Principle, Interest, Taxes and Insurance).
Lenders also often require that their borrowers are three months ahead with their pre-payments, so that they have a cushion against default. This cushion increases a buyer’s closing costs as it has to be paid into escrow at the time of closing.
Hopefully this information is helpful to buyers who want to know what their buyer prepayments and escrows closing costs will be.
For information on the remaining buyer closing costs, please visit:
Download a hard copy of the complete buyer closing costs work sheet.
Disclaimer: Please note that all of the above is public information, that I am not providing tax advice, and that you should consult a licensed and certified tax professional before making any decisions about Florida property taxes.
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Marius J Smook – Licensed Real Estate Eco-Broker, LEED AP for HOMES, Home Energy Rater.