Mortgage Escrow Information

Escrow

An escrow account is a special account, typically set up at closing, and designed to hold money for property taxes and/or insurance(i.e flood, Private mortgage insurance, homeowners) and is collected with the home owner's monthly home loan payment. The escrow account ensures these items are paid when they are due, and removes the risk of delinquent taxes or lapses in insurance policy.

4 key benefits of an escrow account:

1. The Home owner's escrow items are paid on time

2. The homeowner does not have to worry about coming up with several large, lump-
sum payments throughout the year.

3. This money is advanced interest free.

4. If the escrow account is short, the mortgage company will advance the shortage

necessary to cover the escrow item.

The Real Estate Settlement Procedures Act(RESPA) sets limits on the amount a lender may require a homeowner to put into an escrow account. Mortgage companies or lenders will review the escrow amount yearly and inform the homeowner of any shortages or excess. If there is an excess, that is usually refunded once it's above a certain dollar amount, for example: If it is over $100, then the home owner can expect a refund of the escrow surplus. Check with your particular mortgage company for details on the releasable amount for a refund of any escrow surplus. Or you might be able to leave it as a credit towards your next due mortgage payment.

RESPA does not require lenders to impose any escrow account on homeowners; Regardless, certain government loan programs such as: FHA and VA loans, and some lenders may require escrow accounts as a condition of the loan.

When there is no escrow set aside, the homeowner is then responsible for paying all property taxes and/or insurance in full by the due date. This means the homeowner must have the discipline and the necessary funds available on, or before the date of the insurance and taxes. The homeowner is required to provide their lender with evidence of payment to prove that if necessary. If you are interested in tax sale properties and helpful information go to : http://escrow-nonescrow.blogspot.com

Oswin Grant