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Buyer’s Closing Costs- Prepaid Items Estimated

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This section gives an overview of how the prepaid items in the Buyer’s Closing Costs are calculated.

  • First Year Insurance (Homeowner/Hazard) : This figure is not automatically calculated, however is important to other calculations.
  • Insurance Escrow Reserve / (x) Months: These values take the First Year Insurance values and divide them by the fraction of the year input as months (12/x)
  • Tax Reserve / (x) Months (Tax Paid $(y) for Year (z) est.): The tax paid for the year (y) divided by the fraction of the year (12/x).
  • Prepaid Interest For (x) Days (est.): These values are the result of a payment calculation based on Mortgage Loan Interest Rate, the number of days in consideration (x), and the sales price.
  • PMI/MIP (Mortgage Insurance) Fee: Filled using the percentages and the sales price, where the value is made by the percentage of the sales price.
  • PMI/MIP Escrow Reserve / (x) Months: Filled using the percentages and the sales price, where the value is made by the percentage of the sales price divided by the fraction of the year in consideration (12/x).

 

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Updated on February 16, 2019

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