It is very common for mortgage lenders to set up escrow accounts for people who are buying homes, and you should expect this too if you are currently in the process of buying a house. An escrow account is something that helps homeowners save up for their property taxes and home insurance premiums, and here are several things to understand about escrow accounts.
Your escrow account will begin with a cash value
When you close on your house, you will have an escrow account, and this account will contain cash in it. The amount it will contain will depend on the cost of your property taxes and insurance and the date in which you close. The money in this account comes out at closing, and your settlement statement should reveal the amount of money your escrow account will start with.
You will add to it each month
Starting with your first mortgage payment, you will add money to your escrow account each month. The amount you add will depend on the costs of your taxes and insurance, and this amount will be added to your mortgage payment each month. You will have to pay it each month when you send in your mortgage payment, and your lender will make sure the correct amount goes into your escrow account.
Your lender will pay the bills when due
Over time, your escrow account will grow and eventually a bill will come due that must be paid with the money in the account. When this happens, your lender will take the money out of your escrow account that is needed to pay the bill that is due. The nice part about this is that you will never have to worry about saving up to pay your taxes and insurance, and you will never have to write checks for these things. Your lender will take care of all of them.
Your lender will recalculate your escrow account each year
Each year, your lender will recalculate your escrow account to make sure that the amount you are paying each month is accurate. If the account has too much money in it, the lender may issue you a refund check from it. Additionally, your lender might reduce your monthly escrow payments to reflect the overage in the account.
If you have questions about escrow accounts, buying a house, or closing on a house, talk to an experienced realtor in your city today.Share
19 April 2018
I have always been someone who is passionate about making the world around me more beautiful, which is probably why I was drawn to real estate initially. I really wanted to create a place where me and my family could spend a lot of time together in a peaceful, relaxing place, so I started looking for places in my area that were fit for the job. Within a few months, I was able to find an incredible property that was within my price range, so I purchased it as soon as possible. This blog is all about choosing beautiful real estate.