Escrow account
- A separate account into which the lender puts a portion of each
monthly mortgage payment; an escrow account provides the funds needed
for such expenses as property taxes, homeowners insurance, mortgage
insurance, etc.
You can choose to waive escrow and pay your insurance and taxes
on your own. Lenders will usually charge a small fee for waiving
escrows.
You may also here the term escrow used for a different account.
This would be the escrow account where your earnest money would
be held until the closing. Usually the title company or closing
attorney will hold these funds.
Escrow accounts can be great for borrowers with little or no savings
so that when these items become due they are not responsible for
the lump sum payments.
Some lenders require Taxes and Homeowners insurance to be escrowed
as a safeguard to protect the lenders interest in the property.
Down payment - The portion of a homes purchase price that is paid
in cash and is not part of the mortgage loan
There are now many loan programs available that make it possible
for you to buy a home with zero money down. There are also down
payment assistance programs that can help, although many lenders
won't allow the use of such programs.
Generally, the lower your credit score, the greater your down payment
will be. Conversely, the higher your credit score, the lower your
required down payment will be. This is just one more way that it
pays to have a good credit score.
Down payments are usually 10 to 20 percent of the sales price on
conventional loans, and no money down to 5 percent on FHA and VA
loans.
Closing Costs - Expenses, over and above the price of the property,
incurred by buyers and sellers in transferring ownership of a property.
Closing costs normally include an origination fee, an attorneys
fee, taxes, an amount placed in escrow, and charges for obtaining
title insurance and a survey. Closing costs percentage will vary
according to the area of the country.
Closing costs will vary depending on the program you choose. You
credit scores can have an affect on what your closing cost will
be if they throw you into a different category.
Your mortgage broker should give you a copy of your Good Faith
Estimate (GFE), which will break down all of the closing costs of
the loan.
