"The escrow agent is escrowing money for my mortgage escrow while we're in escrow". Huh?

Escrow is a word used often before, during and after a home purchase. It is a person. A process. An account. So it can be confusing.

PERSON: An escrow agent is a disinterested third party whose job is to ensure the outcome of an agreement of terms, funds or process. Most title companies act as the escrow agent in a home closing.

ACTION: To escrow funds is a verb and that means monies will be held in a separate account for a purpose such as a repair, a debt, or payment for a specific pending task. Once the task is proven to be completed, the escrow account is liquidated to the person specified in the agreement.

ACCOUNT: A mortgage escrow account is required by most mortgage holders or banks, to manage and ensure the homeowner's payments to homeowners insurance, property taxes and other obligations on the account. The escrow account is funded each month with the homeowners mortgage payment, paying 1/12th of the annual taxes and insurance. And the bank pays the bills as they come due, making it easier on the homeowner to pay two fewer bills!



The escrow people, process, and account, ensures transparency, accountability, and mutual trust among the parties, contributing to a more secure and efficient transactional environment.

If you have any questions regarding this or other lingo, email us [email protected]

Let’s talk about points! Many people think they are a “scam”, while others love the idea of reducing their monthly mortgage payments. With rates consistently increasing, points are becoming more popular.

Let’s break it down:

• Points are pre-paid interest; the borrower pays it one-time, with their closing costs.
• 1 point = 1% of the loan amount. For example: If the loan is $200,000, 1 point = $2,000.
• The amount that a point brings down the payment varies daily. 
• MYTH: one point drops your rate .25%.

A good lender will show you your monthly mortgage payment without points, an option with points, and show you how long it will take to break even. One lender told us, “if you can get your buy down money back within 3 years, that’s a good investment". For example if it costs you $2,000 more at closing, but that lower rate saves you $50 a month, then your recoup time is 40 months, just over 3 years. "If you plan to be in the house for longer than 3 years, you might find this worth it", they say.

Moral of the story, be sure you have a great lender in your corner presenting you with these options so you can make an informed decision.

Contact our Howard Hanna Mortgage Officer for more info