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IS AN ESCROW ACCOUNT REQUIRED WITH A HOME MORTGAGE?
 
IS AN ESCROW ACCOUNT REQUIRED WITH A HOME MORTGAGE?
 
An escrow account may be set up when someone finances a home purchase. Typically if one has an escrow account it is for both taxes and home owner insurance. Whether an escrow account is required can depend on several factors.
As a general rule in the past if one had a down payment of 20% an escrow account was not required on many home mortgages. Typically a lender would charge a fee if one did not want to have an escrow account. 
 
One reason a lender requires an escrow account is if one fails to pay taxes on property it can be sold to settle the tax bill. The lender would lose their priority in the foreclosure process.
 
As is the case with the lending culture these days escrow accounts are changing.   Now we can waive the escrow account with as little as 5% equity on a conventional loan, and there is no fee for the waiver. 
 
Whether a lender requires an escrow is a question for the loan originator during the application process. VA for instance does not require a lender to have an escrow account for VA loans, however, lenders often "overlay" that guideline and ... more

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