Upcoming Free (& non-promotional) Home Buyer Classes:
Saturday February 3rd , from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)Monday, February 12th, from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
If these class dates and/or times don’t work for you, please let us know. We understand that you have lives, and families, and work. We will work something out that works better with your schedule. Just let us know….
….we also have home seller classes available too…link on left on website
Remember…with reservation…we will throw in lunch, or dinner! 😀
Happy Hump Day!
Before I talk about Escrow Accounts, I want to tell you about something that I think will be fun. 🙂 At the winter client appreciation event this year, Chris and I would like to offer calendars…but not just any boring calendar, but a ‘fun’ one. I want to put together a calendar full of YOUR pictures. So…. every month I am going to ask you to email me your photos to Traciedemars@aol.com, and I am going to post those pictures on my facebook business page at ‘Tracie DeMars Real Estate’. The pictures with the most ‘likes’ are the ones that we will put in the calendar, AND those people will get a gift card to either a movie, or coffee, or dinner, etc. 🙂 So, send me those photos! Let’s have fun with it (and please, family/public appropriate)
Now…to work.. this week I want to talk about bit about escrow. We hear about escrow in a couple of different instances in the real estate process.
When a home is IN ESCROW, it means that it is pending sale. The buyers made an offer, and the contract was accepted (or negotiated to acceptance) by the seller. Once this happens, an earnest money check is written to the title company by the buyer. This check is deposited. The buyers agent sends a copy of the purchase/sale contract to the title company so that, with the earnest money, the home is opened up into escrow. The buyers agent also sends a signed around copy of the purchase/sale contract to the buyers lender so that the buyer can meet with the lender to sign the loan disclosures and get the loan started. Remember that the pre-approval (while important when making an offer) doesn’t mean anything until there is a signed around purchase/sale agreement. A pre-approval is just a piece of paper….a snap shot of your current financial situation. You need to meet with a lender to get pre-approved for a loan so that you know 1- how much home you are approved for, 2- what type of loans & programs you qualify for, and 3- which loans & programs might work best for you. It’s YOUR job to know how much home you can afford though. Your lenders job is to pre-approve you for as much as possible, but it’s your job to know how much home & payment you can afford. Right now interest rates are pretty volatile, and they are constantly fluctuating. When the rates go up, how much you get pre-approved for goes down. The interesting thing is that a lender doesn’t really pre-approve you for a price range…the lender pre approves your for a monthly payment based on your credit, income and debts (this is called a debt to income ratio). Your interest rate isn’t locked until you are about 30 days from closing. What this means to you is that you may not get the interest rate you are quoted at pre-approval since your lender can not start the actual loan process until you have a signed around purchase/sale agreement on a home. Once the lender receives your signed around purchase/sale agreement from your agent your lender will begin to ask for more paperwork and documents. Please get those papers to your lender as soon as you can. We will go over what happens after your offer is accepted more next week.
When the home is IN ESCROW the escrow company/title company then sends out a title report to the buyer. Look this over as some folks need to provide additional information to the title company. Call the title company with questions as they work for you too.
One of the things that is set up when you close on your new home is the escrow account. What is an escrow account?
So what is the escrow account?
If you remember a couple of weeks ago I talked about the 4- 5 parts of a mortgage payment…Principal, Interest, Taxes, and Homeowners Insurance (and for most people; the Mortgage Insurance). I mentioned how the title company will set up an “escrow” account for the buyer…but what is an escrow account? An escrow account is an account set up to receive a portion of your mortgage payment for the payment of those items that don’t go directly to your loan/lending institution. So what do I mean?
That portion of your mortgage that goes toward property taxes, homeowners (aka Hazard) insurance, and mortgage insurance (if you have it and most people do) will be placed into your escrow account. This account builds up, and when your property taxes are due, those taxes will be paid from your escrow account. Your homeowners insurance is due once a year (and if you have flood insurance this will also be part of your escrow account), and when it comes due, that payment will be made from your escrow account. (If you have a HOA, this fee may also be placed into your escrow account. You might be responsible for a HOA payment outside of your mortgage payment….ask your lender about HOA payments.) You may still receive a bill for your taxes, and insurance, but again…those bills will be paid as part of your escrow account that has built up over the year to pay for these items.
On the anniversary of your loan, you will get an escrow update. While your interest never changes, and neither will your loan (unless you re-finance) your mortgage payment can change depending upon whether or not your property taxes go up, or down, and whether or not your insurance amount needs to increase as your home increases in value. Your homeowners insurance needs to be for the amount of your homes value, so as your homes value goes up, so can your home owners insurance. As these are part of your mortgage payment, if it goes up…so does your payment…if it goes down….so can your payment. It usually isn’t by too much though…either way. Every year when you get your escrow account update it will let you know whether you will have enough in your payments to cover next years payments, or not. Another example…. my escrow update came in recently and says I will be a little short for this next year. I can either mail them in $140, and my payment will go down $3 a month, or I can do nothing and my payment will go up $5 a month. I chose to do nothing as I always pay extra on my principal to shorten my loans length of time anyhow. Property taxes are based on the county’s assessment of your homes value. The county assesses the homes yearly, but the numbers they use for tax assessment are anywhere between 12-18 months old, so just know…your tax assessed value is NOT your market value!
I know someone is going to ask if you have to have an escrow account, or if you can pay taxes & insurance separately? Well, I have had clients in the past you have done that…but I wouldn’t count on it nowadays. The vast majority of people will use a FHA loan, and for any state/government loan, they will mandate the buyer have an escrow account set up to pay taxes & insurance. However, please talk with your lender about this if you would like more information.
**as a quick reminder…all home buying adventures should START with the Home Buyer Education Classes. Don’t talk with lenders, and agents until after the classes so you know the questions to ask, what the paperwork means, and fully understand the process. As always though…the classes are Free and Non-Promotional. We are not there to promote ourselves or any ‘special’ agenda like some classes, and while we certainly hope you will call Chris or I, or both of us, to help with your home buying adventure, that certainly isn’t the main focus of the classes. 🙂 We are, both of us, as always, here to help!
Information is power, and I hope that I am able to help you. Good luck, and as always…May the odds be ever in your favor out there…. AND If you are looking for a real estate agent, I would love to be able to help you.
As always….this is just a quick overview…. again…and I can’t say this enough…please remember that your agent is NOT a salesperson, and should not be acting like one. Real Estate is not really about houses, it is about relationships. Your agent, and your lender work for YOU. You drive the bus…we are merely GPS to help you get to your goals. Like the classes, this weekly blog email is to help you with your home adventure. The goal is to be informative and non-promotional. 🙂 We are, however, hoping you will call and want us to help with your adventure.
If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email, text, or facebook me anytime. I am, as always, happy to help!
Thank you again for your business and your referrals!! …and thank you for referring these classes to your friends, family, and co-workers.
. ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…
Upcoming Topics: What happens after an offer is made? or
When is the pre-approval, not a pre-approval?
Last Week: What’s in the Mortgage Payment?
Have a great day, and I will talk to you soon,