Escrow Question

steph120501

LoanSafe Member
Dec 27, 2015
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First, I want to thank the mods here - this forum has been an invaluable resource since I signed up a few days ago.

We currently have a mortgage on our house, we have sold and are buying a new home. My attorney is coordinating the closings and the new house just had the appraisal today, so it is expected that we close on both at the end of January.

My new mortgage is going to be FHA - will they do a credit refresh or pull my credit again before we close?

My main concern is the funds in my current Escrow account - I have about $1800 in there for taxes, and it looks like from past years, that is paid out at the end of January from my current loan servicer. I assumed we would close mid-Jan and those funds would be refunded to me; however, if we close end of Jan and Escrow is already paid out to our municipality, will I still receive the funds back? And if so, would it come the municipality or the original loan servicer? I was depending on those funds to put back into the new home. Any insight would be greatly appreciated!
 

Moe Bedard

Call 1-800-779-4547
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Good morning and you are very welcome! I'm glad the LoanSafe forum has helped you during this most difficult process. I would also like to thank you for joining the community and sharing your own story. This is how everyone learns from one another.

Most likely they will pull your credit again right before closing to make sure nothing has changed since the last credit pull. FHA is not the only lender to do this and many lenders have this policy.

I assume that your escrow fund will be used to pay taxes etc. at closing depending on the date when you finally close. If there is any funds left over, they will credit it back to you. But based on your statement and the proposed closing date, if I were you, I would not count on it. In other words, hope for the best and definitely prepare for the worst.
 

steph120501

LoanSafe Member
Dec 27, 2015
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Thank you, that is very helpful! I assumed since we are funding Escrow with our closing costs, we would receive our current escrow funds.

Also, whatever profit we are making off our current home, can we turn around and sign that check over to the new lender toward the new house at the time of closing?

For example, if I am profiting $10,000 and my closing costs/down payment is $15,000, can I sign over that $10,000 and pay for the rest out of pocket?
 

Moe Bedard

Call 1-800-779-4547
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You are welcome.

The $1,800 you mention is in the old home's escrow account, correct?

FHA loans require a minimum down payment depending on your credit score of 3.5%, or 10% of the home’s purchase price. Most all lenders require that your down payment be seasoned in your bank account for at least 60-90 days prior to closing.

I assume yours is at 10%? The money must be your own, sourced and seasoned, with the exception of gift funds. The amount of seasoning required depends on the source of funds. Money held in bank account must be seasoned three months.

Also, FHA does require that you have cash reserves covering 3 months mortgage payments. FHA says, "The borrower has substantial documented cash reserves (at least three months worth) after closing. The lender must judge if the substantial cash reserve asset is liquid or readily convertible to cash, and can be done so absent retirement or job termination, when determining if the asset can be included as cash reserves, or cash to close."
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
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My pleasure and I wish you the best of luck. Happy New Year as well!!!!
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
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Jan 14, 2011
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Hi Steph,
Just to follow up, I'm assuming you've already figured this out but your escrow account should be returned to you as long as the closing is in January. Typically we would collect 6 months on the new borrower + a 2 month pad to account. Closings in February are the lowest impound collection month of the year so my assumption would be that you would get your money back even if it's disbursed to the county.