How does first-year home insurance escrow work if I pay in full upfront?
I've been approved for a FHA loan. The agent says I need to pay for the home insurance a year in advance. So does this mean I don't need to pay into escrow for home insurance in the first year?
Congratulations on getting approved for your loan! Your first year of home insurance will be paid upfront on or near your closing date for the purchase. This payment is part of your first-year escrow.
From this point, your lender will estimate what your escrow should be every year in order to make sure your mortgage, taxes, and home insurance are paid in full and on time. Sometimes there are overages or shortfalls in an escrow account. Your lender would reach out to you if either of these circumstances occurs. Enjoy your new home!
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