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I'm scheduled to sign the papers for my streamlined refi with Chase this afternoon and I just got the final statement of the closing costs. Most of them seem reasonable, but I don't understand some of the items related to property taxes and the escrow account.

There's a total of about $3100 being added to the principal of the loan. $1577 of that is an item labeled "Property taxes due to county". That amount sounds like the right number for my semi-annual tax bill. Why is that being added to the principal? Shouldn't that either come out of the existing escrow account or out of my pocket at closing?

Further down the statement there's a section called "Reserves Deposited with Lender". One of the items there is 4 months of homeowner's insurance. Then there's another item for $525 for 2 months of property taxes, and a credit of $141 for "Aggregate Adjustment". Those three items combine to be $667, which is also being added to the loan principal. These just sound like more escrow payments, why are they being added to the principal? And why more tax payments? Weren't those covered in the $1577 above?

The only other significant fee is $740 for "Title services and lender's title insurance", $425 of which is for a new title insurance policy. I don't see why I need a new title insurance policy but I'm not going to argue over a few hundred bucks.

So my main questions are: shouldn't the existing escrow account cover the property taxes and HO insurance, and if not, why are those items being added to the principal?

I guess I should be getting a check for the balance of whatever is in the existing escrow account, but it seems like that should be used to cover the new escrow items rather than increasing the loan amount. What am I missing?


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