What is an Escrow Account?

What is an Escrow Account?

When purchasing a home there are many moving parts and several costs and/or monies a consumer needs to account for. If we broke it down into 3 major areas those would be down payment, closing costs and escrows. This article will detail what comprises the escrow monies and how much you should expect to need.

At a high level what comprises escrow account and what is it. It is the amount of money needed to be collected at closing to both pay back the seller for any costs they have paid for and need to be reimbursed and monies needed to fund the escrow account for property taxes and insurance in which that amount plus your monthly payments moving into the future are enough to meet future property tax and homeowner’s insurance bills.

You should expect to have to account for 12 -13 months of property taxes as well as 2-3 months of homeowner’s insurance at the time of closing. Typically, the buyer of a home needs to pay for these costs.

Some lenders may charge a fee for waiving the need for an escrow account but at Hall Financial there is no cost, and you can put as little as 3% down without being required to escrow your taxes and insurance.

As always, please consult with your trusted mortgage advisor to learn more about escrow accounts or any other mortgage related questions and become an educated mortgage consumer.