What is Escrow?

When buying a home you will run into things you might not know. Setting up escrow is one of the most common questions i get from my buyers. When you first start your loan, you have to prepay a certain amount of taxes and insurance. The only way around this would be if you were to buy your house / townhouse in full. When you set up your mortgage , you’ll want to make sure you have at least 2 month’s worth of your monthly tax payments in your account.

An escrow analysis is conducted each year to make sure that the current amount is being put into your escrow account each month for taxes and homeowners insurance. If you’re short, you will have to pay the gap. If you are over you will be sent a check. I had a check sent to be this month. I was over in my escrow account. I used that check to pay off the principal of my loan. The principal of your loan is the balance of your mortgage loan.

Escrow accounts are set up to make sure that at the end of the year. You have money to pay off your taxes and home insurance. Both have to be paid in order for you to kept your home. By law if you have a loan on your home, you must have home insurance. Once your house is paid in full, you make the call to have home insurance or not. Taxes will always have to be paid. Even after you pay your home in full. Taxes will always be due. Here in Texas we pay higher taxes as the home value rises.

For help call 713.836.1822