Answers
Costs, Escrow & Insurance
Closing costs, escrow accounts, PMI and the money questions beyond the rate.
The rate gets the attention, but the costs around it shape your real outlay. Here is what to expect.
Common questions
How much are closing costs?
Typically 2% to 5% of the loan amount, covering lender fees, third-party services like appraisal and title, and prepaid taxes and insurance. Seller concessions and lender credits can cover much of them — ask how to structure yours.
What is an escrow account?
It is an account your lender uses to collect and pay your property taxes and homeowners insurance on your behalf, spread across your monthly payment. It keeps those big annual bills from landing all at once, and it is required on many loans.
What is PMI and how do I get rid of it?
Private mortgage insurance protects the lender when your down payment is below 20% on a conventional loan. The good news: it is removable. As you approach about 20% equity you can request cancellation, and it falls off automatically at a set point.
Why did my monthly payment go up after a year?
Usually an escrow adjustment — your property taxes or insurance rose, so the escrow portion of your payment rose to match. The principal-and-interest part of a fixed loan does not change; the taxes and insurance can.
Do I need an owner’s title insurance policy?
A lender’s policy is required; an owner’s policy is optional but widely recommended. It is a one-time cost that protects your ownership against hidden defects in the property’s history — a forged deed, an old lien — for as long as you own the home.
Can I roll closing costs into my loan?
On many refinances, yes. On a purchase, closing costs are generally paid at closing, though seller concessions and lender credits can cover much of them. We will show you the options for your situation.