5 questions to ask if you’re considering an escrow account

Purchasing a home can be both exciting and overwhelming. You have to make so many decisions—and sign so many documents! Whether you’re a first-time or seasoned homebuyer, you’ll likely consider the option of whether or not to open an escrow account. If you’re new to the homebuying experience, there are several things you should take into consideration when determining if an escrow account is right for you.

1. What is an escrow account?

In a nutshell, it is an account that pools money—from your monthly mortgage payment (which traditionally includes payment, insurance, and taxes)—into an account for the sole purpose of paying your residential property taxes and homeowners insurance.

Opening a mortgage escrow account is a great solution if you have a difficult time saving money or putting money aside for larger distributions. Essentially, you’re putting a smaller amount of funds into an account each month rather than paying a large amount on the front end or at the end of the year.

 

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