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Budget_for_Closing_Costs___Prepaid_Loan_Interest_and_Home_Insurance_Premiums

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					Title:
Budget for Closing Costs – Prepaid Loan Interest and Home Insurance
Premiums

Word Count:
390

Summary:
Entering into escrow on a home can be both exciting and stressful. The
excitement comes from knowing you are close to moving into the new home.
The stress comes from issues that will arise.


Keywords:
closing, closing costs, interest, prepaid loan interest, home insurance,
premiums


Article Body:
Entering into escrow on a home can be both exciting and stressful. The
excitement comes from knowing you are close to moving into the new home.
The stress comes from issues that will arise.

Budget for Closing Costs – Prepaid Loan Interest and Home Insurance
Premiums

As part of any closing, you need to go through certain steps to make sure
you are both getting what you think you have purchased as well as paying
for it. Each of these steps has an associated cost, known as closing
costs, and you have to pay them before you can take possession of the
home. If you do not, the deal will not close and you will lose the home.

When going through escrow, costs associated with closing can accumulate
quickly. Here is a closer look.

Prepaid loan interest is an ugly little surprise for many first time
homebuyers. The lender will often require you to pay the interest that
accumulates between the day the loan is funded and the day you are
actually scheduled to make your first loan payment. Many people
mistakenly believe they have roughly a month before they have to start
paying. This is rarely the case, and the sudden requirement to pay a
hundreds or thousands of dollars can be a nightmare. If at all possible,
you should try to get the lender to fund the loan as close as possible to
the actual closing date, even on it. Try to avoid closing the loan on a
Monday. The lender will have to fund the loan the previous work week,
which means interest will be growing.

Homeowners insurance is something you are going to need and most people
expect as much when buying a home. If you are not informed, however, you
will be surprised at closing when you find out you have to pay the full
premium for the first year of the policy. Depending on the value of your
purchase, this can add a couple hundred dollars to thousands of dollars
onto your closing costs. Again, it is important to budget for this cost
when putting funds together prior to purchasing a home.
If you are going to purchase a home, you are going to have to pay these
two items at closing. Make sure you budget for them to avoid running into
cash flow problems.

				
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