Mortgage & Refinancing Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

Real Estate Tip: Escrow Accounts -- Do You Really Need Them?


If you have a mortgage on your property, whether it's for your personal residence or a real estate investment, chances are you have an escrow account. But if you are working on building wealth through real estate, you may want to take a hard look at your escrow account (or accounts, if you own more than one piece of real estate) and decide if you really need it.

Escrow accounts, also known as impound or reserve accounts, are often maintained by mortgage lenders on behalf of their borrowers. They typically work like this: the borrower's monthly payment covers the loan principal and interest, as well as a prorated amount that is deposited into the escrow account. The lender holds those funds and uses them to pay taxes and insurance for the property when those bills come due on an annual or semiannual basis.

There are a number of benefits to both lenders and borrowers. Serious problems can arise when taxes and insurance bills are not paid, so having that money in escrow helps reduce the lender's risk. The lender also benefits by having funds on deposit; most states don't require lenders to pay interest on escrow accounts, but they can certainly earn money on them. And secondary market buyers who purchase mortgage notes generally pay more for loans that have escrow accounts.

Many borrowers prefer the convenience of spreading the payment of a big bill over 12 months instead of having to make it at one time. Also, the lenders take care of tracking tax and insurance bills, so the borrower doesn't have to. However, if the value of the property is high--creating correspondingly high tax and insurance bills--the borrower is losing interest. Or, if you are a real estate investor with multiple properties, the total of your escrow accounts could be substantial. For example, if your taxes and insurance run a total of $12,000 a year and you have an escrow account, you're losing hundreds of dollars in simple interest and even more if you were to put that money in a higher-yield investment. And when you own several properties, the cost of the convenience of an escrow account increases accordingly. As part of your overall wealth-building strategy, you could put that money in a short-term investment (perhaps a property you intend to quick-turn) and let it work for you until you have to pay your taxes and insurance.

Policies on escrow accounts vary by lender and according to state law. Generally, escrow accounts are required when the loan-to-value ratio is 80 percent or higher. Some lenders charge a fee to waive the escrow account; before accepting such terms, be sure the cost of waiving escrow is less than the potential earnings from the interest.

Finally, be sure you have the discipline and resources to pay your property taxes and insurance on time before you take the step of eliminating your escrow account.

Jordan Taylor is the editor of Millionaire Mentor? Newsletter, which is published by Whitney Education Group, Inc.? To sign up for a free subscription, visit http://russwhitney.com


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Marketplace.org

The home equity loan interest deduction is dead. What does it mean ...
Marketplace.org
Fewer people might take out home equity loans as a result.

and more »


CNBC

Mortgage refinance applications surge 9 percent as rates fall back
CNBC
Total mortgage applications rose 4.7 percent last week, driven by applications to refinance.

and more »


Bankrate.com

4 ways to get the best mortgage refinance rate
Bankrate.com
If you can shave at least one-half of 1 percentage point off your current mortgage rate, it can be worth your while to trade in your existing home loan for a new one. Here are some tips for getting the very best refinance rate. 1. Polish up your credit ...

and more »


Credit Union Times

West Is Best for Credit Union Growth
Credit Union Times
A tight labor market. Employers are having increasing difficulty finding workers, which will be a limiting factor for the economy. A sellers' housing market. The supply of homes in most markets are reaching historic lows and could tighten further as ...



Prospect Financial Group, Inc. Donates to Wells Fargo's Holiday ...
The Daily Telescope
San Diego, CA, December 29, 2017 -- Prospect Financial Group, Inc., a leader in the mortgage refinance industry, was happy to donate this holiday season to Wells Fargo's holiday Food Bank program.Wells Fargo is working with United Way Worldwide to help ...

and more »


TheStreet.com

Cruel Ways Big Banks Are Ripping Off Their Customers
TheStreet.com
Cruel Ways Big Banks Are Ripping Off Their Customers. Banks, especially bigger ones, often play the role of villain to frustrated customers. The thing is, those customers don't even know the half of it. ByBrian O'Connell. Jan 10, 2018 4:33 PM EST. Mike ...



KQED

Labor, Housing, Immigration, and Gun Laws to Take Effect Jan. 1
KQED
Fee to fund affordable housing: California homeowners will pay a new $75 fee on each document of a real estate transaction, such as a mortgage refinance or the redemption of a foreclosed home. The total fee is capped at $225 and does not include home ...



Fidelity 1st Funding Offers Refinance for a Relatively Low Interest ...
Digital Journal
Digital Journal is a digital media news network with thousands of Digital Journalists in 200 countries around the world. Join us!

and more »


Jim Flynn: Disclosure, rescission used to help protect consumers
Colorado Springs Gazette
When legislative bodies (usually in election years) act to protect consumers from the perils of the marketplace, two of the tools they regularly use are disclosure and rescission. The idea behind disclosure is that, given enough information, people are ...



HousingWire

Fannie Mae: Lenders expect lower profit margins in 2018
HousingWire
In fact, more lenders reported a decline in mortgage refinance demand over the previous three months, marking the fourth consecutive quarterly drop. “More lenders reported a pullback in refinance demand from the prior quarter than those who saw an ...

and more »

Google News

home | site map
© 2006 TIGER MEDIA