What is an escrow account? It’s the account set up by your mortgage company that pays property taxes and homeowners insurance.
Ok, maybe that’s not the end of the story… let us explain more!
How does the escrow account get started?
When you are paying your homeowners (and maybe flood) insurance before buying your home – they normally have you pay for 13 months to get your escrow account started. Your monthly payments will include money for your insurances. This money is put into the escrow account, so when your bill becomes due, there is money to pay for it.
That’s right! When you get the bill for your insurance, the escrow account is already paying it for you because you’ve already put the money aside for it.
Is flood insurance included?
Flood insurance is only included if you’re in A or AE flood zone because your mortgage lender requires it.
If you’re in a preferred flood zone like X, C, or B, you will be responsible for writing that check every year.
What if I overpay?
The mortgage servicer will send you a refund check if you have too much money in the account. I just got a check for $130 from mine!
How does it pay my property taxes? The same concept as the homeowner’s insurance – you’re paying into it monthly. When your tax bill arrives, your mortgage lender will also be getting a copy. They will then pay the bill for you.
Always double-check they have paid it, though!
What if my taxes or insurances go up?
The mortgage servicer will adjust your monthly payment to reflect the increase of these items.
What happens when I sell my house?
Your escrow account will be closed out, and you will be refunded for any unused portions of your property taxes and insurances.
Talk to us today for extra escrow questions! Text us now!