True or false?
Escrow is an easy way to manage property taxes and insurance premiums for your home.
Stick around to find out. The answer might surprise you.
Welcome to the basics of escrow. Since you're here, chances are you own a home and have an escrow account or you're looking to buy a home and you just want more information about what an escrow account actually is.
Either way, we can help you understand it. Escrow plays an important role in your mortgage. Let's explore the basics together.
When you own a home, you're responsible for additional home-related expenses like property taxes and insurance. Escrow accounts help you plan for those payments and make sure you have the money set aside for them so you don't have to think about it.
An escrow account is one you fund each month, and we use to pay for these items on your behalf when they're due. Here's how they work.
When you make your total monthly payment, part of it goes toward your mortgage to pay your principal and interest, and another part goes into your escrow account to pay your taxes, homeowners insurance, and other expenses you might have when owning a home, like mortgage insurance and flood insurance.
Each payment you make adds to your escrow account.
Then, when your taxes and insurance are due throughout the year, we withdraw funds from your escrow and use them to pay the bills for you.
So, back to our original question, the answer is 'true'. Escrow is an easy way to manage property taxes and insurance premiums for your home because you don't have to save for them separately.
You're setting aside money for them every month, which is often easier than trying to find the money for lump-sum payments throughout the year. Plus, when these bills are due, they're paid on your behalf.
There you have it. Those are the basics. If you have any questions, we're here for you. Give us a call at 1-800-357-6675. Or, you can check out our other videos to learn more about your mortgage.