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

October 30 2020

Do You Need a Long-Term Mortgage Rate Lock?

When buying a home, this rate-protection agreement can save you money.

Read More

October 21 2020

What is an FHA Loan?

For borrowers with tight cash or tricky credit, an FHA loan can be the answer. But not every situation is a good fit for these mortgage loans. Find out if one is right for you.

Read More

October 07 2020

Homebuyer Solutions: Making Dream Homes a Reality

Our Homebuyer Solutions Group helps successfully secure financing for homebuyers with credit challenges.

Read More

September 30 2020

20 Easy Ways to Turn Your House into an Autumn Sanctuary

Here are 20 cozy, simple ways to decorate for fall.

Read More

September 24 2020

Conforming vs. Nonconforming Loans

When financing your new home, there are just a few things you need to know about the types of loans you might be choosing from.

Read More

September 16 2020

Online Closing Options: Closing Faster, Smarter, Safer

Health concerns, purchasing out of state, or other life interruptions can make closing in person difficult — and that’s why we’ve created two new options for borrowers, our Eagle Express Close and Remote Digital Closing Experiences.

Read More

September 02 2020

6 Cheap and Easy Ways to Increase Your Home Value With Curb Appeal

There are several affordable, DIY curb appeal options to increase your home value that can get you some serious sweat equity.

Read More

August 25 2020

6 Pieces To Brighten Up Any Room

Lighting and fixtures we use in our homes can be utilized to reflect our mood and create ambiance. This can be done by understanding the types of lighting, how they can be used and what mediums they best compliment.

Read More

August 03 2020

Laura Escobar Named 2020 Woman of Influence

Eagle Home Mortgage President Laura Escobar has been named one of HousingWire’s Women of Influence 2020.

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?