The Escrow Account Explained

Transcript

Hello, this is Scott from Texas Home Loans, and today we’re going to talk about the escrow account that is created when you purchase a home or refinance a home. The term escrow means money held to the side, so it can be held for many different reasons. In this context, it means money to be held typically for your taxes and your insurance.

Now if you do have a significant down payment or sometimes less than 20% down, we can waive the escrow count, which means you’ll be responsible for your own taxes and insurance. Most people with the primary residence, they like to include it. It helps them schedule their payments. So you take your monthly bill and you divide it by 12.

You take your insurance bill divided by 12, and as some of those two numbers are added to your principal and interest, which is your mortgage, And the sum will be your P I T I principle interest, taxes, and insurance. And that is all of your payments. It won’t include any HOA bills that is paid separately.

That’s to a third party. You’ll be responsible for that. But as far as your taxes and insurance, if you choose to do an escrow account, That’ll be paid every month in its entirety as taxes can go up and insurance can go up. It will be adjusted each year and sometimes adjusted up as your taxes go up.

That’s why it’s important to file your homestead exemption, and that limits the amount it can increase and also gives you a slight deduction in taxes. If you’re over 65, you want to file your over 65 exemption. If you’re a veteran, you definitely. And you’re a hundred percent disabled, you want to file your disability status to get the tax deduction there as well.

Hopefully this is informative on what an escrow account entails and how it’s paid. If you have any specific questions about your current escrow account or if your current servicer has misappropriated funds. Give me a call, we can go over this. I’ve gotten that fixed for many clients in the past.

For some reason last few years, the servicers have gotten a little bit I think light on their budget with who they’re hiring to manage the escrow accounts. And we’re seeing more mistakes, but you can get that resolved with the proper paperwork, can’t tell you what to look for and to request an escrow analysis.

And with this, we can d. Why the numbers are not accurate. Hopefully this helps. You can call me anytime on this my office number, 8 3 0 9 2 9 7 1 0 0. Have a good day.