Why Should I Escrow? A Common Question among Homebuyers today

By
Mortgage and Lending with Luminate Home Loans, Inc. - NMLS# 150953 NMLS# 274125

Escrow image

Why do you need an escrow account? How does it

work? Escrow accounts ensure that you have the funds

you need all year to pay taxes and insurance on your

home. 

 

Escrow accounts are usually required because liens

—most commonly called municipal liens or tax liens—

can result if taxes are not paid in full. These liens can

overrule an owner or lender’s interest in the property

and mean that the town can actually take your

property and sell it at auction for back taxes owed.   Insurance is equally important as few people could

pay out of pocket to rebuild their home in the event of a disaster.  Having an escrow account makes the

lender/servicer responsible for timely payment of your taxes and insurance. In this case, even if you fell

behind on your payments, the other obligations would still be

kept up to date. It also means that your housing payments will usually be consistent from month to month

rather than having large lump sum payments due one or more times a year.

 

For more information on escrows or other mortgage loan related items, please contact me.

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