Items Required by the Lender to be Paid in Advance

There are certain items the lender may require you to pay at the time of closing or in advance of the actual closing date. These  could include:

• Interest – Lenders usually require payment of loan interest from and including the day of closing through the end of the month  of closing. After that, interest is accrued and paid as part of the monthly loan installments.
• Mortgage Insurance Premium – At the settlement, you may be required to pay your first year’s mortgage insurance premium, or a lump sum premium that covers the life of the loan. This fee is payable to a Private Mortgage Insurance Company. If the loan is being federally insured (FHA) or guaranteed (VA), the mortgage insurance or funding fees for those government loan programs would be charged here.
• Hazard Insurance Premium – Oftentimes lenders require payment of one year’s hazard insurance, commonly referred to as homeowner’s insurance, against fire, windstorms and natural hazards. In order to bind the coverage, the premium is often paid in advance of closing.
• Flood Insurance – Depending on the location of your home, flood insurance may be required and payment of the first year’s premium must be made in advance of closing