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| Simple Real Estate Definitions : Escrow Account Posted: 08 Oct 2009 07:45 AM PDT
With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments. Escrow accounts are managed and disbursed by lenders. When a homeowner "escrows" his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home's annual real estate tax bill plus 1/12 of the annual homeowners insurance bill. By sending a pro rata portion of the tax and insurance bill each month, the homeowner's escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.  |
An escrow account is a designated savings account into which funds get deposited for a specific purpose.| You are subscribed to email updates from Atlanta Real Estate -- Peter Bright, Mortgage Blogger To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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