Escrow? Should you or shouldn’t you?
As a licensed REALTOR here in Jacksonville NC we talk a lot about all types of Mortgages everyday. For the typical first time home buyer I am sure that it seems like you are learning an entirely new language. Learning about DTI (Debt To Income) Ratio, Credit Scores, Points, Interim Interest, Insurance, and the list goes on. I have found that one of the most confusing terms is Escrow. Try to think of it as a savings account that you only add to, you cannot take anything out of it. And the built in plus to that is you don’t have to worry about paying your Property Taxes or Insurance when they are due, your Mortgage Company will do that for you. So, when you are choosing your mortgage make sure you have them set up your Escrows for your Taxes and Insurance. When the bill comes in the mail, don’t have a panic attack, just make sure you get that bill to your mortgage company and they will pay it for you.
I have had clients in the past that have refinanced their homes and were talked into not having Escrows and then they were shocked when they got their Tax bill and Insurance bill and didn’t have the money set aside for it. While not having Escrows makes your monthly payment lower, over the long term I believe that it is less stressful to make a gradual contribution to your annual Tax and Insurance bill instead of having to come up with that money all at once, especially since the Taxes come due in September and will start accruing interest on January 1st. Who wants to find money for the Holidays and to pay your property taxes? Just make sure whatever you decide to do, Escrows or no Escrows, that you understand what you are doing, make sure that whomever you are working with explains everything completely. You don’t need any extra stress in your life, do you?
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Ellen Hough, Jacksonville NC Real Estate , specializing in First-time home buyers and sellers. Working with EXIT Independence Realty, 910-330-6103 (Cell)