Understanding Escrow Accounts

As a first-time home buyer, you're introduced to a variety of terms that you may have never heard before. As your Lake of the Ozarks mortgage lender, I'm here to help you understand every aspect of the mortgage process. Today's blog focuses on escrow accounts, what they are and what it has to do with you and your mortgage at the Lake of the Ozarks.

What is an Escrow Account? 

In the mortgage industry, an "escrow account" refers to an account setup by your lender to hold the money that will pay certain property-related expenses. This includes your homeowner's property taxes and homeowner's insurance. Many lenders require this account to ensure that these expenses are being paid in full and on time.

How Does an Escrow Account Work? 

A portion of each month's mortgage payment will go into this account to cover these expenses. Rather than receiving a big bill once or twice a year to pay these expenses, they will be paid through your lender out of this account. This breaks up the payment into smaller pieces so that you don't have to come up with all the money at once. Instead, you are able to pay all your mortgage-related expenses in one easy monthly payment. It's just less bills that you have to worry about.

Escrow Account Advice 

While escrow accounts are often required by your lender, that's not always the case. In the event an escrow account is not mandatory, you should consider electing to have one. Without one, you will have to plan on paying these large expenses yourself. You will need to carefully budget for these expenses so they don't catch you by surprise. If you fail to pay your property taxes, you could be fined, have a tax lien placed on your property or even face a foreclosure on your property.

For any questions regarding escrow accounts or home loans at the Lake of the Ozarks, give the best mortgage lender at the Lake of the Ozarks a call at 573-746-7211. I'm here to work with you every step of the way! I'll discuss your options, offer competitive interest rates and back it up with the first-class service you deserve. Let me help you into your dream home at the Lake of the Ozarks!

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

What is an Escrow Account?

You've probably heard the word escrow before, but if you're a first-time home buyer, you might not know what it means. Your Lake of the Ozarks mortgage lender is here to help you understand everything there is to know about the mortgage process, including the escrow account. Let's take a look at what an escrow account is and the benefits of having one.

What is Escrow? 

In some situations, a "close of escrow" can refer to the close of a real estate transaction. However, when it comes to mortgages, the word escrow means something different. In our case, escrow refers to the account that is used to pay a homeowner's property taxes and hazard insurance. Each month, you send your lender 1/12 of the annual amount due for your property tax and insurance along with your mortgage payments. This breaks those payments up so you don't have to come up with the entire amount at once. When the bill comes due, your mortgage lender will pay the amount for you.

Benefits of an Escrow Account 

There are many benefits to having an escrow account. In general, it makes everything easier on both the lender and the homeowner. Let's take a look at a few of the benefits:

1. Lower Mortgage Rate - By having an escrow account, it's less likely that your home's tax bill won't get paid and your insurance coverage lapse. The lender doesn't have to worry about a seizure on the property from tax authorities. In addition, they don't have to worry about losses due to property damage because of inadequate coverage. Due to the fact that the lender is able to assume less risk in this situation, you can often get a lower interest rate. 
2. One Less Bill You Pay - Having an escrow account makes your life simpler too. Instead of managing your real estate taxes  and hazard insurance bills on your own, your mortgage lender at Lake of the Ozarks will pay it for you on your behalf. You don't have to worry about keeping track of another bill or paying it on time. 
3. Easier to Budget - Escrow accounts can also make it easier to budget. Instead of making a large payment once a year, you are able to break the payments down into monthly segments. The money is then saved for you until the bill is due. It's a lot easier to create a budget when you have regular monthly payments without sporadic large payments.  
4. No Large Bills - Which is easier: paying a couple thousand dollars at once or splitting that cost up across 12 different months? You might say either way you are paying the same amount. While this is true, I think we could all agree that smaller more manageable payments is a good way to go (unless you're just super good at saving money on your own). If you wait until the end, you might have spent more throughout the other months that you could have saved to put towards your mortgage payments.

In many cases, an escrow account is required with your mortgage loan at the Lake of the Ozarks. Be sure to talk to your lender to determine if an escrow account is a requirement for you. I am here for all of your Lake of the Ozarks home financing needs - feel free to give me a call at 573-746-7211 with any questions you may have.

For Lake area news, resources and tips on financial services, please 

LIKE my Facebook Page, Follow me on Twitter or Connect on LinkedIn

Michael Lasson

Sr. Residential Mortgage Lender

NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.