One of the things I love most about my job as a Lakeland Real Estate professional is that I get to educate my buyers about the real estate purchasing process. With a doubt, a term that is often not very well understood by new Lakeland home buyers is the term Escrow Account. So, I’ve written down a brief overview for you here.
An escrow account is a specially designated savings account into which funds are deposited for a defined purpose.
With respect to Lakeland real estate and mortgages, your escrow account is used to hold money in a neutral account prior to closing, and later to pay real estate tax bills and homeowners insurance payments.
Once your mortgage is in effect, escrow accounts are managed and disbursed by lenders or their designated servicing companies.
Say you opt for an FHA mortgage. This type of home loan will require you to “escrow” your scheduled monthly home owners insurance (hazard insurance) as well as a set amount for your property taxes. The lender basically wants to be sure that you will be able to cover these bills when they come due. When the time does come for them to be paid, your lender cuts a check to each entity from your escrow account. You will not pay these bills directly.