We understand how frustrating it can be to search for a home in Austin. Half the battle is learning the key terms and what they mean in regards to Texas real estate. So each week we bring you Key Term Tuesday – our way of helping you decode the industry jargon that keeps you from owning your home search.
What is an Escrow Account?
An escrow account (aka impound account or reserve account) is a trust fund account set up by the mortgage lender to pay certain fees associated with home ownership.
These fees typically include things like property taxes and homeowner’s insurance premiums and, if applicable, private mortgage insurance premiums (PMI). The buyer (borrower) pays monthly into the impound account a pro-rata amount to cover these recurring costs. Escrow accounts provide a degree of certainty for both the lender and the borrower that the property taxes and insurance premiums will be paid on time when they come due.
Lender’s will usually require an impound account when a buyer’s down payment is less than 20%. Impound accounts are optional with more than 20%.
Looking for a Real Estate Expert?
Our team has a combined 55+ years of experience helping home buyers understand the r. Check out our approach to Buying a Home in Austin to learn more about our team and how we work. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation consultation.
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