Buying a home can be a fun but sometimes complicated part of life because there is a ton of responsibility which comes with owning a home like paying homeowners insurance and fees.
The good thing with paying insurance and fees which come with owning a home is that you will have the option of opening up an escrow account to ease the burden of paying homeowners insurance and fees at one time by breaking up those taxes and fees over 12 months. It’s also included in your monthly mortgage payment, so you don’t have to manage separate accounts to keep them organized.
Let’s say the annual taxes for your home amount to $3,000 and homeowners insurance costs $600, you can break up that $3,600 over 12 months for a payment of $300 per month to the mortgage servicer who you make your payment to.
Before setting up an escrow account the question you should ask yourself is can I be a good saver and commit to setting aside $300 per month over a 12 month period? Some lenders will require an escrow account to be included along with your payment, so check with them to see if you are able to keep your escrow withholdings aside.
If you can’t commit to making a monthly payment of $300 per month to your lender you must be prepared to write a big check to pay the insurance and taxes at different times throughout the year..
Free Money To The Bank?
Although an escrow account is in many instances a smart idea for most homeowners, some industry experts have said that an escrow account is “free money” to the bank which you will be paying for 12 months.
You can avoid the prospect of setting up an escrow account by putting your money into a certificate of deposit, money market account or savings account.
To learn more about escrow accounts or to view the latest homes for sale across Orange County contact Fred Sed & Associates today by calling us at (949) 272-0125.