If you own a home or are trying to own a home, you’ve probably heard the term “escrow” thrown around. So what is it? Let’s delve right in:
What is Escrow?
Escrow is an account that lets a borrower gradually accumulate money for property taxes and policy premiums. Many first time home buyers with less than a twenty percent down payment are required to have an escrow account so it reduces the risk of missed payments or foreclosure.
How Does Escrow Operate?
Essentially, an escrow account is a savings account. The only difference between a savings account and an escrow account is that you have to deposit a set amount into the escrow account each month, whereas with a regular savings account, you don’t have to. These monthly escrow payments…