The term “escrow account” is a buzz word in real estate finance that all home buyers should be aware of. When you take on a new mortgage payment, you will be required by the lender to carry an escrow account.
Since mortgage payments are made up of insurance and taxes, this account simply acts as a savings account that the lender holds to hold these payments. These accounts are especially important when you’re putting down less that 20 percent on a new home.
When you close on your new home, an escrow account requires you to deposit several months of property taxes and homeowners insurance. Each month after, you will add to the account when you make your payment so it will eventually equal the amount needed to pay annual tax and homeowner’s insurance bills.
The escrow account is held by the lender, and they pay the pills as they come on behalf of the home buyer. This means that as long as a buyer sets up the escrow and puts the necessary money into it, they will not have to worry about tax and insurance bills getting paid. At the end of each year, the escrow account is analyzed by the lender to make sure it is set up properly and enough money is being deposited in.
To learn more about escrow accounts and how they work with your new home mortgage, contact Academy Mortgage Atlanta today by calling 404-574-2600 or visit www.AcademyMortgage.com.
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