Which bills will be paid from an escrow account?
One question we often hear from clients is, “Which bills will be paid from an escrow account?” It’s a reasonable question, and an important one to be asking during a real estate transaction. As always, we’re happy to answer any questions you have before, during, and after the escrow process. We have a wealth of experience and knowledge that you should definitely use to your advantage during a real estate transaction.
Now to the question at hand: “Which bills will be paid from an escrow account?” The money from your escrow account will pay the following:
- Property taxes
- Homeowners insurance
- Mortgage insurance (if required)
- Flood insurance (if required)
Please note that the following items will need to be paid separately:
- Interim tax bills, special or added tax assessments, or any other fees that aren’t included in your property tax bill
- Homeowners association fees (if applicable)
- Supplemental tax bills (if applicable)
- Premiums for non-required insurance policies, such as separate personal property insurance
How is my escrow amount determined?
You may also be wondering how your escrow amount is determined. We estimate your escrow amount by determining about how much your taxes and insurance will cost over the next 12 months (1 year). This amount is calculated based on the loan closing documents, taxing authority, and insurance company. Then we’ll divide that amount by 12 and add it to your monthly mortgage payment. Lastly, we’ll determine whether your account will maintain the minimum balance required in each month of the year or if your payment needs to be adjusted in order for your account to stay balanced.
Should I bother having an escrow account?
Having an escrow account is highly recommended – and not just because we are an escrow company. In fact, you’ll be required to have an escrow account if you make a down payment of less than 20% of the property’s value. Even if an escrow account isn’t required, it’s a very good idea to have one in place because it provides you with certain protections and benefits. It helps you manage large expenses like property taxes and insurance premiums so you won’t have to save for and pay them separately. It’s so much simpler to make 1 combined mortgage and escrow payment each month. Plus whenever your property tax and insurance bills become due, we’ll pay them on your behalf out of your escrow account.
Choosing Neighborhood Escrow
If you live in South Bay, there are various escrow companies to choose from, but none deliver the same level of courteous service that Neighborhood Escrow does. We’ve been South Bay’s most trusted escrow company since 1985, and we’re here to meet your escrow needs. We provide all buyers, sellers, lenders, and borrowers with meticulous escrow services, with every detail completely taken care of. Let us support you and make sure your real estate transaction goes off without a hitch. Give us a call today at 310-378-2456 to get started.
