Refinancing question - when to make the last mortgage payment

[Anonymous]

We are in the process of refinancing and are due to go to closing on 9/5. The mortgage with the current lender is generally due on the first of each month and there is a grace period until the 16th. After this date, they will assess late charges. Since we are closing on the 5th, do I still need to make the mortgage payment to the old lender on the 1st of the month? I'm confused about this. I asked my loan processor, but he said that he could not give me advice on this issue.

[Anonymous]

If you have a grace period that lasts past the settlement date, then it just depends on what your payoff statement for the old mortgage is based on. I think ordinarily they base it on what they have actually received so they won't include your September payment, which means if you make your September payment then you'll probably need to make it again at closing (or else get a revised closing statement).

I would not pay September, but you might call your current mortgage lender and confirm that you have a grace period and that your September payment is not included in the payoff statement they provided (or will provide).

Also if you have real estate taxes that will be paid from escrow around now, you should ask your refi lender if you will need to pay them at closing. Often if taxes are due within 45 days of closing they make you pay them at closing, and if that is the case and your taxes are ordinary paid from escrow, then you should ask your lender not to pay them from escrow, because it will be quicker (IME) to get a refund from escrow then to get a refund from the county of twice paid taxes.

[Anonymous]

Op - Generally yes. Mortgages are paid in arrears. The 9/1 payment is PITI for August.

Now, what happens after that is complicated. Because you have recission rights as a matter of federal law, the folder with your paperwork will go to the attorney and sit there until some time in the following week. That means your settlement date is not the payoff date. The escrow firm may pay one extra day of intest as a precaution to ensure that liens are released.

So, you will get some checks after closing. We refi'd out of a loan serviced by Wells and the checks came within 30 days.

- a refund of any excess cash you brought to closing
- a refund of your escrow balance with the old lender
- a refund of any overpayment of the payoff amount of the old loan

You will make some payments at closing. This might be rolled into your new loan balance depending on your equity in the property now.

You should already have all of this information on your HUD-1 form. Your setup might be like the example below. It ,ight be different. Hopefully this example will help you understand the HUD-1.

You will probably be paying these items at closing.

- interest on the old loan for Sep 1-10 or so
- interest on the new loan for Sep 10-30 or so
- initial escrow balance
- fees and points

You will probably make the first monthly payment on Nov 1, the piti in arrears for October.

I'm not an attorney and this isn't tax advice, but if your HUD-1 shows points, you should check if they are tax deductible.

[Anonymous]

Op - 21:23 here. The loan processor doesn't know because he doesn't know how much the escrow firm will be sending on or about Sep 10.

Lastly, if you have autopay, and you havent stopped it, it's probably too late to do so now.

[Anonymous]

I refi'ed yesterday. The settlement company will tell you what to do about the upcoming payment. Tyipcally, you wouldnt' make it.

[Anonymous]

I faced this too. The RE agent advised that I pay it, so I did. OTOH, when my DH sold his condo, he did not. I would pay it.