If you’re new to the homebuying process, you may be introduced to a plethora of new terms you’ll need to know. Escrow accounts are no doubt on the list.
Having an escrow account is often required by mortgage lenders, so getting a better understanding of what they are and how they work can help ease you into the process.
So, what exactly is an escrow account, and what is it used for? Escrow accounts are set up during the homebuying process and act as a neutral third party to hold important contracts, earnest money and other important information related to the home sell.
After the purchase of a home, your lender can use your escrow account to manage insurance premiums and property taxes and insurance.
Every year when your tax office issues property tax bills, your lender uses money collected in your escrow account to pay off the taxes. If there isn’t enough money in your escrow account, they’ll reach out to you to make up the difference.
If the amount owed is less than what’s in your escrow account, your lender can credit you for the next tax year.
As standard practice, an escrow account is required if your home down payment is less than 20 percent of the total purchase price.
Some loan types such as FHA loans also require an escrow account. In some cases, you can cancel an existing escrow by providing proof of regular and on time home payments.
Escrow accounts may seem a bit confusing at first, so take your time as you learn more about them and consider speaking with an escrow officer for assistance if need be.
As a Real Estate Professional my number one goal is to provide exceptional service that leaves my clients happily satisfied. I do this with my commitment to helping you buy or sell your home with the highest level of expertise in your local market. This also means helping you understand each step of the buying or selling process. I do not sell houses, I simply guide my clients through a predetermined series of events to ensure a smooth stress free Real Estate experience. You can count on me to always do what's in your best interest, as I pride myself on being honest, trustworthy, and knowledgeable in the Real Estate market. I understand how important it is to get the best offer for your property, therefore I make it my responsibility to help you achieve these goals. Whether you are buying or selling your primary residence, a second home, investor property, a first time buyer, or just relocating to a new neighborhood, I can help make your home-ownership dreams come true. (First Time Buyer Specialist) (Certified Probate & Trust Specialist)
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