Tehama Country Real Estate

Tehama Country Real Estate – 3 Should A Home Buyer Use Escrow To Pay Their Taxes and Insurance? Real Estate Spotlight By Alex Mason required, that does not mean that the home is going to be free and clear of property damage. Broken water heaters, rogue weather conditions and a myriad of other turmoil can strike, causing severe property damage and dangerous mold conditions that could destroy a home. payments can be tricky to ensure everyone gets paid and the property is safe and secure from foreclosure. H The mortgage escrow account was created to give peace of mind to the borrower that all insurance and taxes are accounted for and sent in on time. The result of letting a payment slide can bring serious and unex- pected consequences to the borrower, no matter if he or she is a seasoned pro at handling a mortgage or a first-time buyer struggling to understand the mort- gage proceedings. PAYING TAXES AND INSURANCE THROUGH ESCROW Your money is safe and sound when handled by an escrow company and you may rest assured that your lender is under strict scrutiny and authority to dis- courage the misappropriation of funds. The Real Estate Settlement Procedure Act, or RESPA, was established by the U.S. Department of Urban Development, or HUD, to bring all lending institutions into governmental account when han- dling and dispersing funds for their clients. If a home owner so chooses, the escrow company is responsible to collect sufficient funds from the bor- rower to cover the cost of property taxes and insur- ance fees that may or may not be mandatory for the sale of the property. PAYING INSURANCE THROUGH ESCROW Natural and man-made disasters often come with- out warning, and you want to be sure your real estate investment is protected. In some property zones, floor and fire insurance is mandatory and the mort- gage company may insist that the premiums are paid on condition of the loan. However, if the property is not located in a desig- nated flood zone, where flood insurance is not andling mortgages and juggling monthly The wise home buyer should be sure to cover all of his or her bases with the maximum cov- erage that they can afford. PAYING TAXES THROUGH ESCROW Property taxes are due at the end of the year, a time when most of us can feel the financial crunch around the holidays. Having your escrow company take a small monthly stipend throughout the year to pay your property taxes at the designated time is a relief on the financial strain and makes a budget more man- ageable. As a borrower, you are not compelled by law to have your money managed, but the system is ideal to reduce the risk of getting behind in your local taxes, an ordeal that could start the home confiscation process in motion. Unpaid property taxes can and will result in the county seizing the property, and the process to regain the home is a long and difficult climb. The distressed taxpayer has only two options: either to pay the lump sum of back taxes due, which could be astronomical, or concede the property to county possession and watch it hit the courthouse steps at auction. To remedy these serious consequences and keep control over your insurance and taxes, the escrow account policies and procedures offer freedom and flexibility with your budget and ensures everyone is paid is time. You may, by law, do it yourself, but most borrowers elect to have this sometimes complicated service per- formed for them by the experts at escrow to boost their confidence that all bills are paid on time. Talk with your escrow professional about the numerous services and advantages to using their system, and the decision should be an an easy one to follow through on their recommendations. Alex Mason is a former real estate agent and mortgage bro- ker living in Los Angeles.

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