Caliber Home Loans’ Atlanta area sales manager, Gina Spearman, spoke on the Mortgage Minutes video show to inform homebuyers about escrow accounts. In most cases, these accounts are used to pay the taxes and insurance components of PITI that make up the monthly mortgage payment.
When a homebuyer makes a down payment of less than 20 percent on a house, lenders will generally require an escrow account that helps to make sure there is always enough money every month to pay the bills. The account is set up at the time of closing on the house, in which the account holder deposits several months’ worth of property taxes and homeowner’s insurance.
After making their mortgage payment every month, the homebuyer will also continue to add to their escrow account. This is because part of the mortgage payment is one-twelfth a buyer’s annual tax bill and one-twelfth of their annual homeowner’s insurance bill. This money adds onto the amount that was initially deposited to ensure there is always enough to pay these bills.
Escrow accounts benefit both the homebuyer and the mortgage holder. They can be satisfied that the bills will be paid in a timely manner, and there won’t be any lapse in coverage or any delinquent tax bills. Additionally, homeowners won’t need to stress about these bills at all, because the lender will be paying for them.
These special accounts are immensely beneficial to both parties in the home buying process and relieve a great deal of stress at an otherwise stressful time. By guaranteeing the money will be there to make proper payments, more time is left to appreciate the home itself.
To get more information on their personal mortgage news, contact Caliber Home Loans at CaliberHomeLoans.com or by phone at 404-449-4515.
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