HomebuyingFinancial IQFeatured May 31 2019

What is Escrow?

When you’re buying a home, you’ll hear the word escrow multiple times throughout the process! The meaning varies slightly, but all of the variations have to do with funds being set aside for your home.

The Offer

The first time is typically when you make an offer on a home. When you write a check for earnest money, showing the seller you are serious about buying, your earnest money is held in escrow by a third party. This protects both you and the seller should you not reach an agreement on the contract.

As the buyer, you’re protected as soon as the offer is accepted. The seller must remove the home’s active listing and cannot accept any other offers. Your contract will typically have several contingencies that allow you to back out of the contract without consequence, for example, if the home doesn’t pass inspection. However, if you walk away for an uncovered reason, the seller is protected and keeps your earnest money.

Closing of Escrow

When your home purchase is complete, you may hear the term closing of escrow. This means that all funds associated with your home purchase are properly disbursed, the documents are signed & recorded, and all other conditions have been met to finalize the purchase of your home.

Find a Loan Officer

Mortgage Escrow Account

As a homeowner, you’ll be responsible for additional payments like property taxes and homeowner’s insurance. An escrow account allows you to set funds aside each month for these bills, so you don’t have to worry about coming up with a lump-sum when they are due.

How does it work?

Your lender will estimate the amount you will owe over a 12-month period and divide the cost over your monthly mortgage payments. For example, if your annual property taxes are estimated at $2,000 and your yearly homeowners insurance premium is $1,000 you will set aside $3,000 in your escrow account for the year, or $250 monthly.

Your monthly escrow payment is then added on to the Principal & Interest portion of your mortgage payment. The money is set aside monthly, so when your property taxes and homeowners insurance premium bills are due – your mortgage servicer takes care of the payments for you by withdrawing the funds from your escrow account.

Calculate Your Monthly Payment

Yearly Re-evaluations

Property taxes and homeowners insurance premiums might change year to year as the value of your home fluctuates. As a result, the amount needed in your escrow account could change and must be reevaluated each year to account for any anticipated surplus or deficit.

What this means is that even though you may have a fixed-rate mortgage your monthly mortgage payment could change each year due to the escrow account portion. Don’t worry, your mortgage servicer will keep you updated with any changes!

Get Pre-Qualified

Search Results for query

February 20 2020

Haven't Considered a Refinance? You Should!

When you refinance, you are replacing your current mortgage with a new home loan. This new home loan also comes with a new term, interest rate and monthly payment that is normally more affordable in the long-run. Refinancing can present a number of benefits...

Read More

February 14 2020

Buying a Home Together

Moving in together is a big step in any adult relationship, but buying a home together comes with a whole new set of hurdles. A home is often the most expensive purchase that you will be making…together! Below are some tips to help you prepare for this...

Read More

February 06 2020

Tax Incentives for Homeowners*

The dream of homeownership comes with many financial incentives. These financial perks extend beyond the more obvious such as building equity and investing in your future, to the size of your tax return each year. Tax season is fast-approaching, so we thought it...

Read More

January 30 2020

Save Time, Close Online with Eagle Express Close

After you’ve gone through the loan process, gotten that clear to close and your Lennar home is ready for you to move in, it’s time for the closing process. Closing is the final step before that new home is officially yours!

Read More

January 23 2020

New Decade, New Design Trends

If you’re looking to tackle a new project in 2020, look no further than your own home. The new decade is a perfect time to update your living spaces.

Read More

January 16 2020

Is a Mortgage Refinance Right For You?

You’ve probably heard by now that refinancing your home loan may result in benefits like lowering your monthly mortgage payments. But how does that work, exactly?

Read More

January 10 2020

How do Interest Rates Affect Purchasing Power?

Purchasing power refers to the price of the home you can afford based on the budget you have available. Naturally, if interest rates start to increase, you will not be able to afford the same home on the same budget. In a nutshell, you will be paying more for...

Read More

December 27 2019

4 Refinancing Myths BUSTED

Don't let common misconceptions keep you away from refinancing your mortgage. Consider the 4 most common myths and why they should be kicked to the curb.

Read More

December 20 2019

Decorating Your Home for the Holidays on a Budget

You don’t have to skip decking your halls this season just because you’re on a budget! The holidays can already be an expensive time for many, so we like finding stress-free and inexpensive ways to get into the holiday spirit. Here are some tips for...

Read More

12345Last

Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator

Payment
Calculator

Affordability Calculator

affordability calculator

Affordability
Calculator

Refinance Calculator

refinance calculator

Refinance
Calculator

The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?