How does selecting Optional in the Property Costs section affect my transaction?

Mortgage-related insurance premiums required by the creditor are those described in § 1026.35(b)(3)(i) and its commentary, except that, for purposes of § 1026.37(c)(4)(ii), mortgage-related insurance premiums do not include mortgage insurance premiums disclosed pursuant to § 1026.37(c)(2)(ii). A creditor need not include premiums for mortgage-related insurance that are not required as part of the legal obligation or under applicable law, such as optional earthquake insurance or credit insurance, or fees for optional debt suspension and debt cancellation agreements.

The option to select Optional is available when the Property Cost is Escrowed, and is not applicable when the Property Cost is Waived or Non-Escrowed. Selecting Optional will exclude the amount of that cost from the Estimated Escrow row and the Estimated Taxes, Insurance, and Assessments amount on the Loan Estimate and Closing Disclosure.