Most Lenders do not allow the balance of an existing escrow account to be rolled into or transferred to create an escrow account for your new mortgage. Instead, the Lender holding your existing mortgage will simply send you a check for the escrow account balance once they receive and process the payoff for your existing mortgage which Penner Law Firm will send after your new loan has funded. In certain situations, if the new loan is with the same Lender as your old loan, they will sometimes subtract your escrow account balance from the payoff amount owed on the current loan, which you can verify by checking the payoff statement provided at closing.
2) How much money is in my current escrow account and when can I expect to get it back from the bank?
Depending on the Lender, the current balance of your escrow account may be shown on the payoff statement which the Attorney will bring to the closing. If the escrow balance is not shown or there is no physical copy of the payoff statement, you can verify your escrow account balance by checking your account online or looking on your last mortgage statement. Your existing lender has 30 days from the date of receipt of the payoff funds to return your escrow balance to you.
3) Why is the payoff of the old loan on the HUD-1 Settlement Statement higher then what my outstanding principal balance of my mortgage statement?
When mortgage payments are made during the life of a loan the payments cover the interest from the previous month. Due to this fact, when you pay off your existing mortgage you will often times be required to pay an additional entire month’s worth of interest to bring the account current. In addition to this amount, Penner Law Firm has cushioned your payoff to prevent a short payoff being made, where your existing lender does not have enough funds to close out your existing mortgage. If there is any delay in your new loan being processed and the payoff being received by your existing lender, for example an error or missing signature on one of the documents that requires correction, these additional days prevent the imposition of late fees and penalties.
4) Should I pay my current mortgage bill? If I do pay it to avoid a late fee, what happens?
If the date of disbursement, which can be found on the first page of the HUD-1 Statement, is the 16th of the month or later you should make your current mortgage payment in order to avoid any potential late fees. If you provide Penner Law Firm with advanced notice of this payment, it will allow us to order an updated payoff statement, to ensure that the payoff amount listed on the HUD-1 Statement is as accurate as possible. If there is insufficient time before your closing to order an updated payoff, we will send the Lender the out-of-date amount shown as owed. This should not cause concern since the extra money that you put towards this payment will not be lost. After the mortgage is paid off the Lender will return the additional funds owed to you through a check which you should receive around the same time as your escrow account refund.
5) Why does my spouse need to sign some of the loan documents if I am the only one applying for the loan?
This new mortgage will impact the rights of all the people listed as owners of the property. For instance, should you fail to make your payments and the new Lender is forced to foreclose on the property in order to secure repayment of the amount owed under the Note, all owners will forfeit their interest as a result of the foreclosure. Due to this fact, everyone who has an ownership interest in the property is required to sign the Mortgage, Truth in Lending Disclosure, Right to Cancel, Title Affidavit, and occasionally additional documents as directed by your Lender. For this reason non-borrowing title holders must be present at the closing regardless of whether or not they applied for the loan.
6) Why is my next property tax payment showing up as a settlement charge on the HUD-1 Settlement Statement?
Whenever your closing is scheduled right before a property tax payment or annual home insurance payment is due (typically within 60 days of such payment) the Lender requires that these payments be made before they are willing to grant you a new loan. As a result, these payments will not be made through your new escrow account, but rather paid upfront soon after your closing takes place. If your existing mortgage has an escrow account already established to make these payments and the existing loan is paid off before the payment can be made, that money will be refunded to you after the mortgage has been paid off. If you know that this property tax payment has already been made, please let us know and we will obtain confirmation from the Tax Collector.
7) How can I provide the funds owed at closing?
There are several different methods through which you can send funds to Penner Law Firm if money is owed to complete your refinance. If the amount owed is less than $2,000.00 dollars you can simply write us a personal check made out to “Penner Law Firm, as Trustee.” Should the amount owed be over $2,000.00, we require a bank or cashier’s check made out to “Penner Law Firm, as Trustee.” If you are unable to obtain the required certified check before your closing we can provide you with a Fed Ex envelope that can be used to overnight the check to our office. We must have the check by the disbursement date set forth on your HUD-1 Settlement Statement. If you prefer to wire transfer the funds directly to our bank account, we can provide you with the wiring instructions that will enable you to do so.
8) If I already paid for my homeowners insurance for the year why are they collecting even more in the escrow section?
The money that is deposited towards your initial deposit on the HUD-1 Settlement Statement for your escrow account, found under Section 1000 of the HUD-1 Settlement Statement, is used to establish a new escrow account which will be used to pay your property taxes and homeowner’s insurance in the future. The initial deposit amount designated is calculated to ensure that when these next payments come due there will be sufficient funds in the escrow account to make those payments.
9) What do I need to have with me at my closing?
Please make sure to bring 2 forms of photographic identification to the closing, including either a driver’s license or passport, to allow the Closing Attorney to properly verify your identity in accordance with the U.S. Patriot Act. If you are able, please also bring any additional funds that are owed at the time of closing in the form of a personal or certified check.
10) Why do I need a witness for my at-home closing, and what do I do if I cannot provide one?
The new Mortgage to be executed at the Closing and several other documents in the loan package require at least two witnesses, according to Connecticut law, to be present at the time that they are signed by you, the borrower. The Attorney present at your closing can act as one of the witnesses, but if the closing is scheduled to take place at your home you must provide a second person. The second person acting as a witness must be 18 years of age or older and cannot be anyone who is listed as an owner of the property. If you are unable to provide a witness at the time of the closing, we can relocate your closing to one of Penner Law Firm’s offices or to a public location (like a Starbucks, library, etc.) near your home where other people will be present to serve this function.