Now that you've explained it the way that you have it makes so much sense....but honestly I've been a homeowner for a while and have always been confused by it. Thank you for explaining it so simply. I wasted a lot of time watching other videos who tried to explain it lol.
Thank you for explaining this, it was very helpful. Most people just graze right over this topic when speaking about home buying and some people speak about escrow as though it's a bad thing.
I clicked the like button before I even watched the video. I opted out of the escrow after my mortgage payments kept going up every year. I now save the money on my own and make payments.
I have had to pay insurance and taxes myself over the 22 years I have been in my home. If I had to pick one I would say put it in the mortgage payment. I am pretty good with not spending more than I should. It was always a hit to fork out about 10k every year. I can see people really getting in trouble if they cannot manage their spending well.
I'm considering paying the taxes and insurance myself, with online and automatic draft payments for insurance and online payments for paying taxes does that make it easy to pay them? And if I am able to monthly transfer funds to an account that I set up to save for taxes, does that cover it? I'm just wondering am I missing something or is it that simple?
Thank you for the info. I am a new homeowner... While I was checking my statement, I saw the escrow part on my monthly payment and I was just wondering why do I have it. Got on RU-vid to get some info then I saw your video. Now I understand. ;) Thanks a lot.
As the others have said, fantastic breakdown! Thank you. My only question is if the escrow account is a one time fee to set up the account or if it's an ongoing charge throughout the term of the mortgage?
Check with your lender, because often time you will get a better rate if you escrow. The idea is not to pad the account, rather different times of year will require a different amount collected at closing. Ex. if you purchase in the middle of the year you will need to collect more property taxes at closing, than you would if you purchase a property in the beginning of the year.
Honestly, Escrow sounds amazing until you get a surprise bill saying Escrow Shorted, and have no idea how that happen since you always pay monthly. The first two years my father lived in his house was great, but he was never explain fully how Escrow works nor what could happen. So one day he got a check saying he was paying to much so they gave him the money back. Now its saying there is a shorted and he Mortgage payment went from 1200 to almost 1700 currently and it keep going up. Its insane on how they do not explain this things in the first place. What we want to know is how to get the payment down again, cuz we can't continue paying 1700 a month for Mortgage and yet still have money for the rest of the bills.
I finally understand what this means after watching over 15 RU-vidrs thank you now I understand I have to pay my taxes every year or else my mortgage go up so that means in five years I’ll be paying $15,000 a month if I don’t pay my taxes😂
After so many training materials at work, and videos online it seems to me escrow is far more broad than most training materials will say within that training. The time between saying you wanna buy a house and it closing seems to be called escrow in some cases of videos I've seen, but they don't often allude to an account when these videos are talking about it - they just talk about it like a time window. I suspect because a neutral account is often setup in this time window where money is coming in from different parties for things that need to be payed or handled , but I'm not sure on that and I'm not sure if it is sometimes called escrow (time window) even if no account is involved. There's the example this guy mentions, which I appreciate his articulation, where you're paying into it with the ultimate goal of having the escrow account manager pay some bill, insurance, or tax for you, but what's not mentioned here, which may not have been the scope of his lesson, but for some things a lender may be required to escrow something like flood insurance. Which is admittedly the angle of research on the word that I'm coming from. I think in the end, escrow is a kind of account in a sort of neutral place (in the context of ownership) where the money is set aside to be dealt with at a future time the way it should be dealt with.
Is the couple of thousand dollars you mentioned a fee? If it is going to be paid towards my insurance, then I am not losing that money. What am I missing?
Hey Kyle ! Watched many of your videos throughout my home buying journey. My question is that if you have escrow they give you better interest rate which may be same percentage difference as you get interest on your some normal saving account. In that case, do you think having escrow or not having escrow would make any difference !? Another question is that if someone don't have escrow, they can just pay homeowners insurance and property taxes separately as they would pay any other insurances or taxes normally, right !?
Why can't I sign the Mortgage contract first at closing? And Post Closing instructions. A SATISFACTION LETTER at Closing, where is it? Are you a where there is NO liens on the LAND? But I'd like an answer as to signing the MORTGAGE document first at closing and please explain!
Pretty much, except you don't pay any more than your insurance and taxes. There are no fees for an escrow account. Lenders actually would prefer you had an escrow account because it's less risky for them.
Can you explain applying the escrow balance to the payoff of the loan? How is that helpful for a borrower? I understand it lowers the necessary cash to close, but come the month those taxes are due, how does the lender assure that those are paid on time?
Hi! As long as you pay the minimum payment that your lender requires, you are okay. And lender will refund it if there's still money if you pay off your loan.
Thank you for this info! I am putting down 25% and therefore qualify to waive escrow. However, I am really confused on what the time frame is for tax and insurance payments and how all of the closing costs shake out (i.e. paying back taxes from the seller etc.) for the first year of a new home purchase if you waive escrow. If you waive escrow, when do you need to pay that lump sum property tax after closing? Like if you buy the house in June and the county collects taxes in September, do you pay taxes in September? How do you pay the seller for the taxes they already paid for between June and September? Is that paid outside of escrow or in escrow? You can see the layers of confusion I have and I really need someone to explain this to me like I am a child haha. Love your videos!
Hey Kyle, You mentioned we can save couple of grands by not opening a escrow account. Can you please tell me the amount in dollars (approximately) how much we can save if we request to waive off the escrow account ?
My lender refused to remove my escrow. I am over 20% in equity and had a BPO come out so I can remove PMI early. I thought since PMI was gone it'll be a easy process of removing it but according to my lender with fannie mae, my loan to value ratio has to be below 80% for the principal balance based on orginal value. They are ripping people off and making money through the interest on escrow accounts.
In the state of FL, and I’m sure others, you get a discount for paying taxes early. The escrow always utilizes this discount. Even if you have a shortage they will pay it for you. You’ll have to repay the shortage however you got the discount. For me it’s 4% which on my taxes is roughly $200 saved. Pretty hard to find something that will pay that in savings interest for the amount of taxes. It should be obvious your cash for taxes and insurance should be pretty liquid if you aren’t escrowing lol.
what happens if you agree to have an escrow account when you buy the property. But comes a few months and you decide to cancel escrow, so you pay for taxes and insurance yourself. What happens to the money you made payments on? Does the bank refund those back to you?
I unknowingly waved my T.I. for Escrow on a rental home. I live in Hawaii and my property is in Texas Q. Will they mail me a property tax bill ? & how long does it usually take for county records to change names ?
So I’m putting down 20% on my home with a conventional loan I was told I had to escrow by my realtor regardless because they didn’t want me to default and just take a loss at the end when I decide no to pay my taxes but I don’t think she knows what she’s talking about I should talk to my lender instead? I’m in Texas
I understand I have to pay my insurance premium up front. But I also have to pay 2 months additional into escrow at closing. A cushion. What I don’t understand is why I have to pay 10 months of property taxes!!!! Lol I’m buying in Georgia. It’s yearly here. But they will take out my property taxes every month once I close along with home insurance. And by the time property taxes are due I’ll have over 4K in there just for property taxes lol why??? Does some of this money get returned to the seller for the year they paid in advance? I’m confused.
You're probably paying 10 months of taxes because there is a semi-annual tax bill about to be due. If that's the case, then the seller will give you a tax proration credit at closing. Tax proration is basically where you and the seller split the upcoming tax bill. They pay the portion for when they were living in the home and you pay the portion for when you were living in the home.
Is mortgage insurance different from property insurance when I look at my mortgage account online the escrow account only shows taxes and not insurance I pay property insurance through Allstate but what about the mortgage insurance for the lender?
What happens to my mortgage payment if I request to remove Property Tax from my escrow account and pay only the insurance with my mortgage payment? My escrow always goes up every year due to my property tax paid earlier by the Lender which I requested several times to be paid on the first of December which effects my escrow balance. Please advise. Thanks.
Thank you for the video! One question. If you decide not to get escrow, for example if I’m paying $2200 currently and I opt out of escrow do the differences from the escrow subtract from principal/interest. So I’m essentially I’m paying that on my mortgage bill but on the side paying/setting aside the escrow
Hello. Thank you for making a video with an articulate explanation of a home escrow. My escrow account would not be tired to a mortgage or home loan, but a loan with my fully owned home as collateral. Is this sort of escrow account the same set up?
There is no real negatives to having an escrow account. If you're worried about the up front reserves then your likely the type of person that NEEDS an escrow account. The idea that you're going to personally put this money aside; thousands of dollars mind you, and not touch it and have it available in time YEARLY is just notoriously unlikely. MOST people aren't that reserved with their money. It's the reason why these accounts exist. There are zero fees associated with having an escrow account. (Actually the opposite, some banks will charge you a fee for NOT setting up an escrow account) The banks provide this FREE service because it protects them just as much as it protects you. They also assume responsibility for any mistakes in payments. IE wrong amount paid or paid late, etc.; they will take responsibility for any additional financial harm that might have caused you. To even entertain the idea that you're going to use some of this money to invest or somehow make additional capital off of, is just very dangerous way of thinking. Most people are going to be far better off with an escrow account then without
Hi Enrique, thank you for taking the time to watch my video and sharing your thoughts on escrow accounts. You make a good point that having an escrow account can be helpful for those who struggle with saving and budgeting. Additionally, it's great to know that there are no fees associated with having an escrow account and that banks even provide this service for free to protect both the borrower and themselves. Thanks again for sharing your insights, if you're ready to start on a pre-qualification, feel free to visit our website at www.winthehouseyoulove.com/lender. Have a great day!
Hi! Great video and loved how you broke everything down. When does the "cushion" return back to the buyer? I'm putting less then 20% down so I understand it's required to have the escrow/impound account but when can I actually close it? What are the requirements to closing it? Thanks!
So I’ve bought two houses in the last six months the first home was destroyed in a hurricane and we are currently going through the repair process so we are living in our second home which is meant to be a rental property… our monthly payments on the first house have gone from less than 1k a month to 1400+ a month … a home we aren’t even living in mind you … is there a way to close an escrow account if it’s already been opened ? Cause each time it increases its due to escrow
I’m putting 20% down Conventional, I have enough cash to pay for payments for up to 3 years also have proof of retirement if needed.Just made a offer and it fell apart because my realtor included escrow and didn’t offer seller consessions wanted me to pay full closing when I offered full asking price with 20k down .so my question is it my choice not to have escrow or is this something I should ask my lender ? What should the realtor have done to close the sale she was representing buyer/seller I fired her after that felt she wasn’t after my best interest.on top of it she put 2,300 Hazard insurance WTF is that and why would i be a hazard 750 credit score
Thank you for the info. I was wondering if you know whether we are obligated to keep this escrow account even though our PMI was recently removed due to the increase in value of property and the LTV being below 80%? We’ve had our loan for over 2 yrs. but our loan was recently transferred to a different services. Your comment is greatly appreciated.
Sometimes my lender tells me that my escrow is short couple of grand, and I need to pay it lump sum or added to my monthly mortgage. Is this due to an excessive prorate miscalculation or something else?
Hello, thank you for your videos!! My question is as follows. My request to cancel my escrow was approved today. I would like to know what happens next?? Do I contact my city and insurance company and tell them I'll be paying them directly?? Do I get any escrow money back that was collected last year?? Thank you in advance for your assistance.
Thanks for the great information! It has been super helpful in planning our home buying process. My question is how or when do I qualify to get an escrow disbursement check?
i get all that but i cant find a video to answer my question ..................... when i get those escrow "shortage" notices in the mail every other year or every year whatever ... is it a good rule of thumb to pay that shortage off in a lump sum or let the lender factor it into your monthly mortgage payments and adjust the monthly amount ??? just wondering which option is good for a homeowner . thx
You kept it simple and informative thank ya!!! What about if you are using VA loan and PMI is not needed how would you explain Escrow then? Thanks in Advance.
Is there a difference between Title escrow and the escrow that is set up to hold and pay for tax and insurance during the transaction and thereafter as they become due? I'm seeing a Title - Escrow Fee in Section C of my Loan Estimate document. I'm not sure I have the option to decline that. And who holds the earnest money if there is no escrow account? Thanks for sharing your knowledge.
Title escrow holds the closing funds and disburses them. The lender escrow holds taxes/insurance as you pay monthly. You'll want to reach out to the title company you're using for clarification on their fees. Your contract will tell you who will hold earnest money. Waiving escrow is only waiving the lender's escrow after the closing happens. Waiving escrow in no way changes what happens with earnest money.
I get it better than before but still have a question...is there a financial loss when doing the escrow compared to no escrow? I get that we have to put money in as a buffer when setting up the escrow before paying into it monthly, but do you get that buffer money back when you sell the house? I hope this makes sense. I am looking into a loan option that offers a fantastic interest rate but unfortunately I am unable to opt out of escrow even providing a 20% down payment.
Am I really ***saving*** money by waiving escrow with 20% at closing? The way I see it, it LOWERS my closing costs, sure, but I still have to pay the same amount per year right? So if I waive at closing, and pay my prop taxes and mort insurance myself, isn't it still the same amount as if I broke it up monthly and left it as part of my mortgage payment?
You still have to pay taxes and insurance, but you don't have to let the reserve payment just sit in an account and do nothing if you waive escrows. I'd rather take that money and (1) pay off debt (2) add to emergency savings (3) repair items in the home or (4) invest.
Is escarole only for the first year if not how do I put money in it for the next year of taxes and if I’m looking at a house how can I get an estimate on how much I will need for escarole
Escrow is for every year you have the loan. Your monthly bill includes taxes and insurance that get deposited into the escrow account each month until the insurance and tax bills come due. To get an estimate for escrow, you'll want to get a quote from a mortgage broker. What state are you purchasing in?
I will be closing my home purchase around May. I am quite skeptical about my initial escrow account because my lender is asking for 10 months of property taxes and 3 months of insurance .. Is 10 months of property tax fair or is it excessive?
