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Frequently asked questions

I’m refinancing, why do I need to pay taxes and insurance when they aren't due yet?

There are 2 sections on your closing disclosure where you’ll see charges for your homeowners insurance premium and your property taxes; these are in Section F (Prepaids) and section G (Initial escrow payment at closing). If your homeowners insurance premium or property taxes are due within 60 days of your closing date, you’ll see these charges in section F.

When you refinance your mortgage, you won’t see a charge for your homeowners insurance premium in section F if you have more than 60 days remaining on your current insurance policy at the time of closing.

If your property taxes are currently due, you’ll see a charge for property taxes in section F. For example, the first property tax installment in California becomes due on October 1, but the last day you have to pay (without any late payment penalty) is December 10. If your refinance is closing after October 1, but before December 10, your property taxes need to be paid at closing since they are “due.” Keep in mind that property tax due dates vary depending on where you live.

Because the money you’d paid into your original escrow account doesn’t transfer to your new mortgage (when you refinance), you may see an amount in section G for homeowners insurance premiums and property taxes. This amount is to ensure your new escrow account has enough funds to cover your homeowners insurance premiums and property taxes when they do become due.

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