Foreclosure Shop   Educational Resources
 

Print Debbie Siegel's Mortgage Minute

Debbie Siegel
Understanding Escrow Accounts

You've heard the term every time you've purchased a home or refinanced, but do you understand what an escrow account is? To make sure you're getting all the facts when receiving monthly payment quotes, take a minute to learn the details.

An escrow account is a fund set up by your lender to handle property tax and property insurance payments. By establishing this account - typically with three months of tax and insurance payments up front, and then monthly additions that are included in your payment - the lender protects itself.

If taxes are not paid, for example, the taxing authority can place a lien on the property that has a higher priority than the lender's lien. Likewise, if a flood, fire or other catastrophe befalls the house and insurance isn't paid up, the lender isn't paid either.

Many property owners find that escrow accounts are a convenient way to ensure that all property-related taxes and insurance are kept current. They simply send the bills to the lender when they arrive and the lender pays them.

This Article is an excerpt from the 16 Page Print Edition!

Are YOU getting the print edition of ForeclosuresMass Monthly?

Get a FREE copy* of this month's newsletter (worth $49.97!) when you pickup your Real Estate Investors ONLY Free Gift (worth over $267.97!)

First Name:

Email Address:

* Next 37 17 investors only!

Escrow accounts also earn interest for you. Every year you should receive a 1099NT reflecting the interest earned on the money that you pay in every month. As minimal as it might seem, it is considered taxable income.

Related to escrow accounts, one thing to clarify when receiving monthly payment quotes from prospective lenders: ask if the quotes you receive are principle and interest (P&I) or principle, interest, taxes and insurance (PITI). A payment may seem extraordinarily appealing without the taxes and insurance, but the fact is, most lenders require these expenses to be included in your monthly payment.

Got questions about real estate financing? Contact Debbie@westchester-mortgage.com or 617-965-1236. She'll consider them for inclusion in a future column. Debbie Siegel is president of Westchester Mortgage in Newton, Mass. She is licensed in several Northeastern states.

« Interview With The Expert July 2006  

What did you think of this article? How did this article help you? Let us know, and we just might include your response in the Mail Bag section of the newsletter!
Name: Email:

Did you like this article? You May Also Like:
Gary Yi Professional Profile: Using ForeclosuresMass.com Can Ease Mortgage Woes for Investors says one Mortgage Company President
Gary Yi, Secure Mortgage Corp.
Gary Yi, President of Secure Mortgage Corporation is a very busy man these days. Lower interest rates have caused a boom in purchases and refinancing. There are some tricks to buying foreclosed property that could make the process easier if you are looking for financing...
Steven Goselin Interview with the Expert: Don't Let Mold Become *Your* Problem
Steve Goselin, EnviroTech Clean Air, Inc.
Finding mold in a building can literally bring a real estate deal to a crashing halt. No matter how much or how little mold there is, as the seller you’re responsible for clean up – or selling the property “as is” with full disclosure. In his article, mold remediation expert Steve Goselin explains why mold is causing problems in the real estate industry and what you can do to ensure it doesn’t become your problem.
Ken Lizotte Feature Article: Letters to Homeowner Prospects: 6 Rules Will Get Them Read... and Answered!
Ken Lizotte, CMC
Of all forms of writing, letter-writing may be the toughest. After all, who reads letters anymore, let alone writes them? Most of us frantically clip thru our snail mail as quickly as possible, casting 90% of it unopened into the trash. Thus, any letter you send to a foreclosed homeowner must grab your recipient's attention at once, hold his or her interest and (best case scenario) motivate your reader to action...
Robert Tenney Legal Corner: Banks are willing to work with investors to find equitable solution
Bob Tenney, Cunningham Machanic
Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met...
Robert Tenney Legal Corner: Banks are willing to work with investors to find equitable solution
Bob Tenney, Cunningham Machanic
Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met, they are also the folks who send out demand letters—the step that begins the foreclosure process for the homeowner. "We send the demand letter and give the homeowner time to reinstate their loans. If that doesn't happen we proceed with the foreclosure," says Tenney...
Jennifer Matthews Interview with the Expert: Helping Families Get Back on Track Financially After Foreclosure
Jennifer Matthews, Founder, Creating Financial Literacy, LLC
You can play a key role in helping clients get back on their feet both financially and emotionally by understanding the challenges they face. According to Jennifer Matthews, an advocate for those who have been through foreclosure, often times people lack basic financial literacy and management skills - the lack of which contributed to their financial woes. In this livley article, Jennifer Matthews provides the essential tools consumers need to increase their financial literacy, repair their credit, and recover from foreclosure.
Elizabeth Weintraub Feature Article: Five Strategies for Successfully Negotiating Short Sales
Elizabeth Weintraub
As any seasoned investor can attest, dealing with banks on short sales requires a large bottle of aspirin and the wisdom of Solomon. Real estate broker-associate Elizabeth Weintraub gives you the low-down on how to successfully deal with banks - everything from dealing with confrontational bank agents and writing contracts to proving to the bank why you're the best buyer.
Stephen Elias Feature Article: Three Steps to Rebuilding Your Credit After Foreclosure
Stephen R. Elias, Attorney
Gone are the days when rebuilding one's credit history after going through bankruptcy or foreclosure was straightforward. With the crash of the sub-prime lending market, consumers are under intense scrutiny when applying for mortgages and credit cards, which means rebuilding credit can now take three to five years - or longer!. In his article, bankruptcy attorney and author Stephen R. Elias provides three key steps that you can pass on to your clients who need advice on how to recover from foreclosure.
Jeremy Cyrier Success Story: Husband and Wife Team Know it Pays to be Sincere when Making Deals
Jeremy Cyrier, The Cyrier Sales Team
As a real estate broker and investor, Jeremy is always on the lookout for good investments for both himself and his customers. Through weekly emails from ForeclosuresMass, Jeremy is notified of foreclosed properties listing up-to-date, accurate data. Not too long ago, Jeremy was notified of a foreclosed apartment complex that peaked his interest. This is what transpired...
Suzanne Brunelle Legal Corner: Do your Homework before Investing
Suzanne Brunelle, Portnoy and Greene, PC
So, you heard you could make a financial killing or find your dream home buying property at foreclosure? That may be possible, but first you need to beware the pitfalls of the novice and, as my father always said, "Do your homework"...

Copyright © 2003-2010 ForeclosuresMass Disclaimer/Policy Media Inquiries
ForeclosuresMass is a division of ForeclosuresMass, Corp. For more foreclosures, visit: RI CT NH VT ME MA DE CA MD PA NJ