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Chain of Lakes Mortgage
Escrow Account Basics:
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Mortgage escrow
accounts are special accounts set up in which money is held to
pay for property taxes, fire and hazard insurance premiums,
mortgage insurance premiums, and other escrow items. Escrow
accounts ensure that these items are paid in a timely fashion.
They are a guarantee that there is always enough money to pay
these bills when they are due so that the homeowner avoids the
risk of lapsed insurance coverage or delinquent taxes.
With Escrow homeowners do not have
to worry about coming up with several large, lump sum
payments, each with different due dates, throughout the year.
Mortgage companies typically cover shortages when tax or
insurance payments increase. It is very common for mortgage
companies to pay taxes and insurance premiums when they are
due even though all the money for these bills has not yet been
collected from the homeowner.
Mortgages have lower rates and downpayments because of
escrows. Escrows protect the interest of investors of home
mortgage loans by making them more attractive and secure as
investments.
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