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You’ll see a line worded something similar to ‘‘Hazard insurance premium to ABC Insurance.’’ If you follow this line across the page to the first column, you’ll see the first year’s insurance premium. It can be anywhere from hundreds of dollars to thousands, depending on how expensive insurance coverage is in your area.

This first year’s premium is part of your closing costs, but there’s more. If the mortgage company is handling your insurance payments, they’ll need to set up the escrow account to receive money that you pay into it each month. Your monthly payment will include one-twelfth of the premium, so you’ll have enough money in the account a year from now to pay the cost of the insurance. For example, if your annual insurance bill is $835, it will add about $70 to your monthly mortgage payment.

However, to get the escrow fund set up and make sure you’ll have $835 in it by next year, the lender charges you two months, or $140, to get the fund established. This charge is also part of your closing costs and is found in section 1000 of the HUD’s ‘‘Reserves Deposited with Lender,’’ where you’ll see a line worded something similar to ‘‘Hazard Insurance 2mo(s) @ $70/month.’’ If you follow this line across to the first column, you’ll see a charge for $140.

Tips: When the mortgage company pays the homeowners insurance out of your escrow account, many homeowners forget to review the policies every year for any upgrades or changes that are required. It’s an out-of-sight, out-ofmind situation. Remember, too, that you can change coverage and/or companies a month or two before renewal date if you are able to find a better deal.

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