What in the world is Escrow? I have heard this word thrown around on many occasions and had no idea what it was. Many of us involved in a separation and divorce or even the death of a spouse find ourselves dealing with many things we have never had to deal with before. One of those things, for me, is escrow.
This week I learned that my mortgage was sold to another lender. So I have had three mortgage companies in one year. This sale brought up the issue of me having to call my insurance company to let them know. Why, you ask? Because of escrow.
I found a definition on The Street Website…“When you get a mortgage to purchase, build or refinance a home, most lenders prefer to set up an escrow account so they can pay your property taxes and insurance premiums for you. A monthly payment is added to your mortgage bill and analyzed once a year to cover any increases in taxes or insurance premiums.”Feb 15, 2008
As I understand it: our mortgage lenders take a part of our monthly payments and place them in “escrow,” set them aside…to pay our homeowner’s insurance and property taxes. For me, I like having my mortgage company take care of these items for me. It helps me to budget my property tax and insurance payments.
You will find the term escrow used in real estate contracts also. I found this definition as related to escrow and real estate….“An escrow is a neutral third-party that holds funds until conditions are met. Real estate escrow means putting something, such as a deed or money, in the custody of a neutral third party until certain conditions are met, according to the website Realty Times.”
Call to action….Now that I have a basic understanding of escrow’s meaning, I now have to do one thing. I have to call my insurance company and let them know of the lender switch.
I hope this helps you in your situation.We can do this!