Berkeley CSUA MOTD:2013:March:11 Monday
Berkeley CSUA MOTD
2013/3/11-4/16 [Reference/RealEstate] UID:54622 Activity:nil
3/10    I'm trying to help my parents, in their mortgage there's an
        "escrow" amount. What exactly is this? From reading Google,
        the loan company uses the escrow account to pay for home
        insurance, but they've been paying home insurance themselves.
        I'm really confused on what this fee is.
        \_ Without an escrow account, you write checks to your insurance
           company and the County yourself to pay for the insurance and
           property tax.  Your (usually) monthly mortgage payment stay fixed
           property tax.  Your (usually) monthly mortgage payment stays fixed
           for the duration of the loan.  With an escrow account, your
           mortgage bank sends money to your insurance company and the County
           at the right time to make those payments.  Your (usually) monthly
           mortgage payment is increased by approximately 1/12 of the annual
           insurance premium and property tax.  You receive interest for the
           money that is sitting in your escrow account and hasn't been
           applied to those payments.  At the end of each 12-month period,
           you'll need to make extra payment to the escrow account if the
           mortgage bank under-estimated your insurance or property tax
           amounts by too much, or you'll receive a refund if the bank
           over-estimated by too much. The bank will also re-estimate the
           amounts for the subsequent year, and adjust your monthly mortgage
           payment accordingly.
Berkeley CSUA MOTD:2013:March:11 Monday