Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Justin Froiland from Fairway Mortgage. What is Escrow, and why do you need it? You can reach Justin at 605.695.1429 or justin.froiland@fairwaymc.com.  His office is located at 412 5th St., Brookings SD 57006 or on the web at www.BrookingsMortgage.com 


Do I need an Escrow account, and how does that help me?


- Hi good morning everybody, Shane here from the Brookings Home Team, powered by Century 21. We apologize. We're a few minutes late.

- We are.

- But, you know, things happen. We got school. We got trains. And I had some technical difficulties here with my little tripod. So, sorry about that. But, we are here for the Monday morning mortgage tip. And as you can see with me I've got Justin from Fairway Mortgage. And we talked a little bit yesterday about what you we gonna talk about. Are you still planning on talking about?

- Yeah.

- Okay, so I had this question come up a few times. And we thought why don't we just talk about that a little bit and just let everybody know. So, take it away Justin.

- Perfect. So we had a, Shane and I were talking yesterday like you mentioned. And he as well as I have had a couple questions lately revolving around an escrow account, and what exactly that is, and how that works. So, I wanted to talk about that a little bit today. And so what an escrow account is is it's essentially kind of like a savings account that's attached to your loan. So, each month with your monthly mortgage payment that you're making, it includes the principle and interest that goes to repay back the loan. And then it also includes the escrow portion, which can be a number of different things. Most commonly being the property taxes, the home owners insurance, and the PMI. And the PMI, that's private mortgage insurance. It's another term that when you're going through the mortgage process you should be familiar with. What it is is if you have anything less than 20% to put down, it's something that the lender will require as a form of protection for them. And so that's why a lot of people are under the impression that you have to have 20% to put down. And quite frankly that's false. But, of course it's much more beneficial for you if you can. And so how that escrow account works is each month that payments collected and the amount that's allocated towards those property taxes, home owners insurance, and PMI sits in an escrow account. So then once a year when the homeowners insurance is due, and twice a year when the property taxes are due, it's paid out on the homeowners behalf. So it's something that's kind of out of sight, out of mind, they don't have to worry about doing. And there's a couple other things that can be included with that escrow account, depending on the situation. If you're purchasing a property that maybe has a home ownership association fees to it, that could be included with that. Or maybe you're buying property that's in a flood zone, so your flood insurance would also be included in that escrow account. And so just wanted to spend a little bit of time talking about that today business I've received a number of questions lately on exactly how that works and what that entails. And furthermore, once you went to have your loan and you've closed on your loan, every single year your lender is gonna do what's called an escrow analysis. Because sometimes those property taxes can go up and maybe that home owners insurance maybe goes up or goes down a little bit. And so when they do that escrow analysis every year they'll analyze the account to figure out if they need to raise your payment, or if they can lower your payment. And then they'll provide notification of that every year when they do that. So, can you think of anything else Shane as far as the escrow account goes? Okay.

- No, it's a good idea to have it. For me, I mentioned yesterday when we were talking. You know, trying to remember those twice a years and the once a year thing with the insurance and taxes can be challenging. So, it's good to put it in somebody else's hands, and let them be responsible for it for your own property rather than yourself. So, no it's good to have great great information. Went a little longer than we anticipated, but it's perfect information for you. 'Cause like I said, we've had some questions on that. And people just aren't quite sure how all of that works there. But, if you have any further questions about this or anything else, please reach out to Justin. He'd be happy to talk to you. As normal, information on the top, on the bottom, on the sides, wherever your device let's you see it, you'll be able to reach him. Or, just instant message him here. Make a comment here. Feel free to share or tag anybody else in the video that you feel that it would be a benefit for them to listen to. And again, reach out to any of us. We'd be happy to talk to you about it. So, that will do it for today's Monday Morning Mortgage Tip. Another shameless plug, remember Gas Out Cancer next Thursday, or this Thursday, the 30th from five to seven. We'll be out there pumping gas for you and you get 21 cents off per gallon of gas, and that 21 cent savings is donated back to our Relay for Life Team. You can win one of two Visa $50 gift cards, and I got some awesome sponsors out there. So, be sure to jump out there this Thursday from five to seven. It's only two hours, so you gotta do it quick. We might run outta gas, who knows.

- Yeah, pretty much win, win. You get cheap gas, help a good cause, and might get to win a gift cards.

- Might could win a gift card. So there you have it. All right guys, thanks for watching. Have a great week. Oh, next weekend is Memorial weekend. So, we won't have Monday Morning Mortgage Tip on Monday. It'll be on Tuesday. So, we gonna change it up a little bit next week. But, have a great Labor Day. Did I say Memorial Day? I don't remember what I said.

- It's Monday.

- Its Labor Day weekend, so have a great weekend guys and hope to see you soon. Thanks for watching.

- Thank you.


Thinking of selling and/or moving to Brookings, Volga, or any surrounding areas? Got questions? I’m here to help! Visit BrookingsHomeTeam.com for more details!

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