Escrow Account

s

These are usually

required with less than 20% down

do I need one?

Why

Reason 1

real estate taxes

Unpaid

a priority lien against your

property

Can become

The town can

“take” your property

This means:

You lose and so does the

lender

That means:

The escrow account exists to

assure the payment of your real estate taxes

Reason 1:

Reason 2

Disasters

If you suffered one of these and your insurance

had lapsed

Not only your home but you

would still have to pay back

your loan

You Lose Twice

How do they work?

And why do I have to put

money in upfront?

Let’s look at an

example

If you purchase a home this

month

But the taxes aren’t

due until next month

That money needs to be

collected

So it can be paid when the tax bill is available

Ex.$6000 yearly total= $500 per

month

We’ll show each monthly

installment as one block

= $500 in

When this money is paid out, we’ll turn that block to

red

= $500 out

At the closing, you put in

enough blocks

To be able to pay that first tax bill

& to create a two month cushion

2 month cushion or minimumbalance

Next month, you addanother block

2 month cushion or minimumbalance

A $1500 Tax Bill comes due

2 month cushion or minimumbalance

And the money is paid out

2 month cushion or minimumbalance

Every month you add another block

2 month cushion or minimumbalance

The balance builds

2 month cushion or minimumbalance

Until another tax or insurance

bill comes due

2 month cushion or minimumbalance

And the money is then paid out

2 month cushion or minimumbalance

Over time it would look like this:

Over time it would look like this:

Over time it would look like this:

Over time it would look like this:

Over time it would look like this:

Over time it would look like this:

What’s important

to remember

Is that it’s always your

money

And when you sell

your home

The balance in your escrow account is paid

back to YOU

2 month cushion or minimumbalance

Your escrow account refund check is attached below

With anEscrow Account

Your payment is the same from

month to month

There are no big

payments when a tax bill

comes due

That makes

budgeting easier

All in All

Escrow accounts can make it easier to manage payments and assure that you are protected