Escrow Accounts – Are You Paying Too Much?

Written by Yuri Szilasi

Many people are paying more than they need to into their escrow accounts. A simple check of your own account can save you thousands in interest overrepparttar course of your loan.

Money in escrow is "dead money". It doesn’t earn interest for you and it doesn’t reduce your mortgage interest payments. Therefore every cent in your escrow account is costing you money. Make sure there is no more tied up in escrow than there needs to be!

Here is a brief summary of what lenders can and cannot do regarding escrow. I'll also explain how to check your own escrow account to make sure you are not paying too much.

State laws vary; you should consult your own attorney to determine what your local laws allow.

The way lenders handle escrow is regulated byrepparttar 148945 Federal Real Estate Settlement Procedures Act, which applies to all "federally related mortgage loans".

Unless local law says otherwise, at settlementrepparttar 148946 lender can require a borrower to deposit funds in an escrow account set up forrepparttar 148947 payment of taxes or insurance premiums. The sum deposited cannot exceedrepparttar 148948 actual amount ofrepparttar 148949 taxes and premiums, plus one-sixth of their estimated total.

Ifrepparttar 148950 taxes come due in January and you are settling in July, your first month's payment will be due Sept. 1. For September, October, November and December, you will make four months' escrow payments. Sincerepparttar 148951 lender will require a full year's payment in January, and at that time only four months' payments will be in escrow,repparttar 148952 lender can escrow eight months at settlement, plus one-sixth ofrepparttar 148953 total amount, which amounts to an additional two months' worth of escrow.

Thus, at settlement, do not be surprised ifrepparttar 148954 lender requires you to pay 10 months' tax payments into escrow. These funds are held byrepparttar 148955 lender and paid whenrepparttar 148956 taxes come due.

The rules apply until you pay off your loan. In other words,repparttar 148957 lender can hold two additional months' escrow, so that if you are delinquent in one or two monthly payments,repparttar 148958 lender will still have sufficient funds.

At least once a year,repparttar 148959 lender that services your loan must send you a statement clearly itemizing "the amount ofrepparttar 148960 borrower's current monthly payment,repparttar 148961 portion ofrepparttar 148962 monthly payment being placed inrepparttar 148963 escrow account,repparttar 148964 total amount paid intorepparttar 148965 escrow account duringrepparttar 148966 period,repparttar 148967 total amount paid out ofrepparttar 148968 escrow account duringrepparttar 148969 period for taxes, insurance premiums . . . (as separately identified) andrepparttar 148970 balance inrepparttar 148971 escrow account atrepparttar 148972 conclusion ofrepparttar 148973 period."

When you receive this statement, you should review it carefully. Confirm with your taxing authority and your insurance company exactly whenrepparttar 148974 payment is due andrepparttar 148975 amount ofrepparttar 148976 payment. Use a calculator to determine whetherrepparttar 148977 lender has properly calculatedrepparttar 148978 amount ofrepparttar 148979 escrow. Congressional testimony has uncovered many errors made by mortgage lenders.

There are also many cases in which lenders fail to payrepparttar 148980 real estate tax on time - or at all. Often,repparttar 148981 first time that homeowners learn of this non payment is when they receive a notice of tax sale fromrepparttar 148982 jurisdiction where their property is located.

Building A Home? Want To Ask A Builder The Right Questions - Not The Dumb Ones!

Written by Cplm Dillon

These are real builder questions that I got from readers of my e-book, "Residential Development Made Easy" with answers from a major USA Master Builder operating in 48 States.

Question 1.

My wife and I are planning a new home. We intend approaching a builder or two in this area, and I plan on asking them these questions.

My wife is very adept at planning and researching. Under what circumstances do you recommend we hire an architect? And Why or why not? (This is not a loaded question. I am not an architect and neither is my brother-in-law. We would prefer to construct without hiring an architect.) Reply

It would depend on your budget. Some architects inrepparttar US charge as much as 10% ofrepparttar 148944 budget of a home to dorepparttar 148945 plans. Master Builders, as opposed to "Local Builder Bob," don't like to place their clients in a position of hiring an architect until they really need one. The best advice our clients get is to prioritize their actions as follows:

First: Getrepparttar 148946 loan;

Second: Getrepparttar 148947 land;

Third: Getrepparttar 148948 Interior Designer;

Forth: Getrepparttar 148949 architect.

In our case, we have in-house architects and structural engineers.

It is best to hire an Interior Designer (ASID) and have them work with you to designrepparttar 148950 floor plan, which is uniquely suited for how you and your family use space andrepparttar 148951 style you like.

Armed with this floor plan you would then send it to us and we would create your architect blueprints from it.

Blueprints are part ofrepparttar 148952 quote we provide our clients. This way they don't have 'Sticker Shock' from a local architect.

Question 2.

How much price and quality research re materials can we expect our builder to do or to have done?


This depends onrepparttar 148953 builder you hire. Forrepparttar 148954 most part, you can't expect too much. Most builders work in their comfort zone.

They use materials they're used to working with. They usually won't try something else unless insisted upon byrepparttar 148955 home buyer or developer. And, then they usually hire an outside source to do this.

As Master Builders, we use current technology and one ofrepparttar 148956 reasons why we are both profitable and successful is that we keep abreast to new technology and want our buyers and developers to have this benefit in their homes.

Question 3.

Is it reasonable for us to ask our builder to identify his subcontractors and allow us to talk withrepparttar 148957 primary subs before we enter into a contract with him (and after)?


It may appear to be reasonable from your point of view, but, not very realistic. Subs come in and out of a job site. If one is not available another one is called in.

Once you have signed a Contract with a builder, he is your 'one point of contact.' The subcontractors are his subs - not yours. Remember you have engaged him for his building management expertise to completerepparttar 148958 job on time and on cost.

That means he must have full control and so by you talking torepparttar 148959 subs directly you are creating confusion. You can't have two bosses on a job.

Confusion costs you more money. When you or your wife talk to a sub, you are not engaged in a social conversation. Let's say you made an innocent comment about some aspect ofrepparttar 148960 subs work - like you regret picking those tiles inrepparttar 148961 bathroom and have seen some nicer ones. That is all you said!

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