José June 21, 2007 Real estate Visits: 1 View Comments Print this post Send this post Copyright Jose Ramirez

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The escrow account is a reserve that have mortgages with the intention of ensuring the payment of insurance and property taxes. These accounts are not required by law, but the banks that provide financing may be required as a condition for granting mortgage financing.

The management of these accounts by financial institutions is regulated by the Real Estate Settlement Procedures Act (RESPA) in section 10 on retention and payment. This law states that you can retain enough to pay insurance and annual contributions up to sixth part of that total amount (equivalent to two months) as security in case you are behind in paying your loan. At the time of closure will must have taken the sixth of which is the minimum equivalent of two months late on your payments. From that point on, it is easy to estimate how much you pay monthly to your escrow account, just add all the costs of insurance and annual contributions and divide by twelve.

Once a year, the anniversary of the mortgage, he examines the status of the escrow account.

The maximum balance you have in your account should be the total annual expenditure plus 1 / 6 of them and the minimum should be one sixth of the total annual expenditure.

If there have been variations in the amounts paid and if there is any excess over $ 50.00 the bank is obliged to refer you money. If the surplus is less than $ 50.00 is at the discretion of the bank, or refer you deduct that amount from subsequent payments to the reserve account.

If there is a deficiency because insurance or contributions rose, if less than $ 50. shall be obliged to pay within 30 days and if more than $ 50. will be adjusted monthly payments. It is then that your monthly payment increases.

If you change the tax status of your property the bank will automatically pay the contributions. If payment was greater than $ 800 shall be divided that amount within 24 months. If payment is lower will be required full payment of that amount.

Anyway, the bank is required by law to sending you an annual statement of escrow account. It is your responsibility as a consumer review that state.

This is only a summary of an article previously published in the newsletter sent every two months. To read it in its entirety accesses the wiki and open an account. You'll find much more information.