What Is An Escrow Account

n escrow account is a designated savings account into which funds get deposited for a specific purpose.

With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.

Escrow accounts are managed and disbursed by lenders.

When a homeowner “escrows” his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home’s annual real estate tax bill plus 1/12 of the annual homeowners insurance bill.

By sending a pro rata portion of the tax and insurance bill each month, the homeowner’s escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.

Mortgage Rate Review September 4, 2009 (Chart)

Mortgage Rates continued their nine (9) day accent posting 375bp for the week. Friday was the only negative day with the FNMA 30 YR 4.5% giving up only 9bp on a quiet day before the Holiday weekend.  The positive gains can be attributed to the negative pull back in the equities market. The DOW gave up 1% for the week, and unemployment rate for August increased to 9.7%, that’s the highest since June of 1983.

This is a very interesting time in our economy, if the financial markets continue to sell off, expect rates to stay low. If we see a bounce back in the equities market watch for mortgage rates to rise fast. This so called recovery feels and look eerily similar to the 2002 head fake.  Believe me I am not a bear although this run since last September’s catastrophic collapse of the markets.

Build and Destroy – It’s About Time

It is about time!  Kudos Guaranty Bank.  The simplest way to limit the supply is to eliminate it.  Not only does it limit the supply, it detours future dilapidation and possible degradation.

Thanks to Vision Victory Manifesto for the footage