Building and Technology

2 Responses to “ Explain To Me Escrowed Home Insurance? ”

1. 
   Free WP Autoposter Plugins Nov 4th, 2009 at 6:13 pm

   You are paying for the first year’s insurance up front at closing. Next year when the insurance bill comes due they want enough money to pay the bill before the current policy expires- plus the cost may be slightly higher next year and you may or may not be current on your payment. So you pay for 1/12 of the policy each month plus put 2/12 up front in escrow. Get it? So if you close June 1 this year your insurance policy will come due next june 1. You will have made 11 payments by that time (if you make payments on time) so the extra two payments are not excessive.

2. 
   ca_surve Nov 4th, 2009 at 6:13 pm

   It sounds like they:
   1) Want your annual policy paid upfront as part of the closing costs
   2) Want an additional two months coverage in case, down the road, you bail.
   3) Want to establish an impound account so that when you annual policy comes due (next year) the bank will be able to pay for your policy for you.
   You prob. can cite #2 as excessive since they are requiring an impound account.. but #1 and #3 are pretty routine.
   To answer your question, you will be ‘even’ when the existing policy expires… then your impound balance will pay for the next years policy plus you should get a bit of interest from the money they keep in the impound.
   If they are requiring impound accounts for your insurance, check to see if they are also requiring it for your annual property taxes.
   Both of those amounts change each year so they will readjust your payment for that reason – even if you have a fixed payment.
   Welcome to home ownership….
   .

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