An escrow account is where you can put money to ensure that your real estate taxes get paid on time. Escrow accounts may be managed by either a mortgage company or the homeowner himself. Putting money in escrow means to set money aside in this account for real estate taxes. Learn the pros and cons of who should manage an escrow account.
Ask Ilyce – June 18, 2002
When should a homeowner refinance to take advantage of low interest rates? What is a punch list for a new construction home? WGN's Money Saving Expert Ilyce Glink answers real estate questions from the Mailbag.
Property Taxes May Be Split Between Buyers And Sellers
When you buy a home who pays the property taxes for your first year will depend on when you bought the home and where you bought it. In some cases buyers and sellers split the cost of property taxes. How much of the property taxes buyers and sellers pay may be determined by prorating the amount.
Taking Possession Before Or After Closing
Possession is when you actually take control of the property. It is the last thing that usually happens in the home buying process, unless a special deal is made to allow the sellers to move out after closing, or for the buyers to get access to the property prior to closing. The seller might let you take possession early so that you can move in or get started on the remodeling. If you do close, and the sellers are keeping possession for a short period of time, you should put a portion of the closing funds into an escrow account at closing. These funds are an important piece of leverage you may need if the sellers decide perhaps they'll stay after all.
Out Of Control Lenders and Real Estate Tax Escrow
Escrow funds are designed to help the lender make sure the property owner pays all the necessary taxes. It's in the mortgage lender's interest to make sure your taxes and premiums get paid in full and on time. However, sometimes mistakes happen in the escrow process and sometimes lenders take advantage of the consumer.