14 Dec Ring in 2016 with More Money in Your Pocket
How would you like to pocket your homeowner’s insurance premium and property taxes? When you hear that December is the perfect month to close your escrow account, you might be left scratching your head. Though “escrow” sounds like a confusing and intimidating term, luckily it’s actually one of the simpler pieces of the home refinancing process.
What are an escrow account and an escrow refund? In many instances a portion of your monthly mortgage payment is applied toward homeowner’s insurance, property taxes, and, in some cases, monthly mortgage insurance. These “escrow” funds are held in an escrow account by your current lender, separate from the lender’s operating accounts, and are disbursed when your homeowner’s insurance policy premium, property taxes, and monthly mortgage insurance payments are due. Typically these are paid at the end of the calendar year, leaving you with a significant balance in your account. Check your most recent mortgage statement and it will list the current balance in your escrow account!
Your new refinance loan with American Lending Solutions will include enough funds to “prime” a new initial escrow account, which will include the monies necessary to cover your home owner’s insurance premium, property taxes, and mortgage insurance if applicable. What this means for you is that the balance in your escrow account is refunded to you by your current lender/servicer when you refinance your home – usually within 30 days of closing your new loan!
That means you’ll receive a decent sum of cash as we ring in the New Year – just in time to recover from that Christmas spending frenzy. We often recommend taking the lion’s share of your escrow refund and using it to pay down your other high interest liabilities, the principal of your new mortgage and/or adding to your rainy day funds.
Have more questions about escrow refunds? Contact an American Lending Solutions professional today. We’re happy to address any questions or concerns you might have – and to help you begin 2016 with some extra cash.