OfflineWhen you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.
When it's used
If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.
How it works
When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.
Its purpose
The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.
How you benefit
Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.
Escrow payments
Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.
When escrow may be waived
In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.
Anita
Jar-Le Investments, Inc.
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"FAILURE IS NOT AN OPTION"
For posting this as a sticky. I am sure it will come in handy to a lot of people.
Anita
Jar-Le Investments, Inc.
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www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
just a side note - read all info regarding escrow account before depositing your money in it. They are hard to get out of once you do.
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
I'VE MADE MY MIND UP , TO START OFF BY LOCATING A BUYER(S). SO, IF I COULD GET ANY SUGGESTIONS, I'D REALLY APPRECIATE THEM. I'M IN THE PHOENIX AREA,I'M A REMODELING CONTRACTOR RECENTLY RELOCATED HERE TO BETTER MY BAD CREDIT SITUATION BY REHABBING PROPERTY I FIGURED TO FIND DISTRESSED REHABABLE PROPERTY SITUATIONS. THAT I WOULD IN RETURN,LOCK UP A DEAL to ASSIGN-REHAB-& SALE.SO, IF ANYONE KNOWS OF ANY INVESTORS 'GIVE ME A HOLLER, WILL YA'..
Hi James
I read your post and I think it great that you are doing your thing. But I am going to make a suggestion to you. A very smart guy on this site posted in the forums last week a post called "INVESTORS NOT WANTED"
In it he spelled out what true investor or money lenders look for in investors and partners. A solid deal/plan. I wanted to paste the link here but my computer is running slow. If you are interested in reading it this is how you can get to it.
In the upper left corner there is a search box. type in investors not wanted and it should pop up for you. If you cannot find it send me a message or post ere and I will do my best to get the link for you.
I wish you much success.
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
http://www.deangraziosi.com/node/1062
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
susie here is the post you requested. I tried to send it via PM but it would not go
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
anitarny I cannot find the post INVESTORS NOT WANTED. Could you please locate it for me. I tried the search box, but I could not locate it.
Bossman
Escrow times such as 30-45-60 90 days etc. can be requested by the buyer at time of making offer
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
Now, it seems as though when the property is secured under contract the investor/buyer takes the contract alongwith any earnest $$$ to the escrow agent to start the process???? I am correct or did I miss a step??? Pls explain the process in much more "simpler" details... Thanks so much....Shalom~~
Hello: I have been pre-approved for a mortgage, and I have a Proof of Funds Letter. Is the Proof of Funds letter used only to show I have money in my Bank Account? Does the Seller get this money for their Down Payment at closing? Or, is the Proof of Funds Letter used only to show I have Down Payment funds available. Is the actual downpayment fee calculated into the mortgage agreement and paid with my monthly mortgage payments, because they know I have Proof of Funds in my Bank Account.
I am a little confused about this, please make it clear for me.
the POF letter is used to show the sell that you have the financial abilty and funds to purchase the property
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
the POF letter is used to show the sell that you have the financial abilty and funds to purchase the property
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"
the POF letter is used to show the sell that you have the financial abilty and funds to purchase the property
Anita
Jar-Le Investments, Inc.
***********************************
www.jarleinvestments.com
www.socalrei.ning.com
TWITTER - anitarny / FACEBOOK - antarny
"FAILURE IS NOT AN OPTION"