Escrow is a concept that, if you haven’t ever been through the mortgage process, you probably wouldn’t have had the need to learn what an escrow account is. Since we’re all about buyer education here at Homespire, let’s jump into what exactly escrow is and why utilizing and escrow account can make homeownership easier.
First, let’s go over the basics. Your mortgage payment is made up of four parts – principal (which goes towards paying off the actual house), interest (what you pay to the lender to borrow the money), taxes (property taxes), and insurance (homeowners insurance, flood insurance if you need it).
Every month when you make a mortgage payment, the taxes and insurance portion goes into its own little bucket (a.k.a. your escrow account). That money is set aside to pay your taxes and insurance when they’re due.
So basically, each month, you’re paying a 12th of your annual property taxes and insurance. Way better than paying it all at once. And the best part? It’s on autopilot. It’s all done for you, so you never have to worry about setting aside the funds each month yourself and making sure you pay them on time. I love automation.
And that’s it! It’s really that simple. If you have any questions about the home buying process or want to see how much home you can comfortably afford, don’t hesitate to reach out. A Homespire loan officer is always available to run the numbers for you. It’s quick. It’s free. And it’s always good to know your options.
Visit https://www.homespiremortgage.com/apply-now/ to find a Homespire Loan Officer near you.