Скачать или смотреть Escrow: What is it?

Midwest Mortgage Mentors Christy Flynn and Blake Rappenecker take a closer look at escrow. We've all heard the term, but what is it really?

Your monthly mortgage payment will always include your principal and interest. Escrow takes into consideration your property taxes, homeowner’s insurance, HOA (homeowner’s association) dues, and -- if necessary -- flood insurance.

Your financial institution is then responsible for paying these items.

Do you HAVE to have an escrow account?
If you have a 20 percent equity position in your property, you’re not required to escrow. If you choose not to, it’s on you to make sure you are paying taxes and insurance on time.

A lot of people find it easier to have the bank take care of these payments. In that case, we increase your payment based on the amount due for insurance and taxes. We collect that amount with your monthly payment, and then we disburse the funds accordingly.

Why is it that I’m paying a 12-month homeowner’s insurance premium within my closing costs if I’m escrowing my insurance and taxes?
In a purchase scenario, at Midwest Bank we require that you have 12 months of insurance coverage set up. Your escrow account is projecting for the future, so we are collecting reserves at closing.

We require that you have the insurance at the time of closing because you’re paying throughout the course of the year -- and when your renewal comes due -- we want to make sure we have enough money to cover your next renewal.

Stay tuned for the next episode of Midwest Mortgage Mentors!

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