The Anna Maria Island Sun Newspaper

Vol. 12 No. 18 - February 15, 2012

REAL ESTATE

Understanding escrow accounts

If you have owned a home with a mortgage, chances are you or your lender collects funds to be placed in an escrow account. But have you ever taken the time to really understand your escrow account and what your consumer rights are?

The definition of escrow generally refers to money held by a third party on behalf of transacting parties. Specifically as it relates to mortgages, the mortgage company establishes an escrow account to pay property tax and possibly insurance during the term of the mortgage in order to protect its interest in the property.

This time of year those of us with mortgages on our properties are receiving statements from their lenders itemizing the interest paid on the mortgage and the escrow balance in our accounts. An Escrow Account Disclosure Statement is required to be provided to borrowers at least once a year.

Mortgage lenders decide if an escrow account is required as one of the terms of granting the mortgage. Some lenders collect escrow for both property taxes and property insurance, and others only collect for property taxes. Escrow accounts are strictly an arrangement between the lender and the borrower.

If you have an objection to a lender establishing an escrow account for your new mortgage, it is possible to shop around for a lender who does not require one. However, unless you have a personal relationship with a lender and a sterling past history, this may be impossible to find. After a period of years demonstrating an excellent payment record, you could request the lender to suspend collecting monthly escrow payments.

The federal government does not require escrow accounts and has no input as to lenders' decisions, however, they do regulate the amount of escrow than can be held as a cushion in the event a homeowner misses a monthly payment. Under federal law, this amount is two months or one-sixth of the annual escrow required.

The monthly escrow calculation is pretty straightforward. The annual property tax and/or insurance premium expenses are divided by 12 and this amount is added to the monthly mortgage payment. These deductions are adjusted annually based on changes in property tax and insurance premiums.

Shortages are generally divided by 12 and added to the monthly mortgage payment to keep the account in balance. If there is an overage of $50 or more in an escrow account, lenders are required to send a refund check for this amount. Overages under $50 are applied to the monthly payment.

Most homeowners, especially first time buyers, welcome lenders handling this aspect of their responsibility. Escrow accounts take the obligation and burden of saving large amounts of money off of the homeowner and put it on the lender, in addition to eliminating the stress of keeping track of property tax and insurance premium due dates.

If a lender for whatever reason does not pay your property tax and insurance premium on time, he/she is fully liable for any penalties assessed. It's also important to verify your lender is paying property tax bills in accordance with the discounts offered by Manatee County.

Whether you have owned a home for years or are new to the market, understanding escrow accounts is vital to your household budget's bottom line. You may not have much of a choice when it comes to escrow accounts, but it's essential to understand the process and knowledge is power.

Real Estate Transactions
Real Estate Transfers from Jan. 1 to 31, 2011
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

Sold Date List Price Sold Price Property Address SFUA Lot Size Property Description
01/24/2012 115,000 115,000 512 Spring Ave # 9 456 1 Br/1Ba Condo, short sale
01/09/2012 2,490,000 2,200,000 703 North Shore Dr. 962 2 Br/ 1.5 Ba SFR
01/19/2012 499,000 445,900 801 Jacaranda Rd. 1972 50x121 3 Br/2 Ba SFR
01/25/2012 899,000 790,000 402 South Bay Blvd. 1953 3 Br/2 Ba SFR
01/30/2012 549,900 538,000 111 Peppertree Lane 1680 83x106 2 Br/2.5 Ba SFR
01/30/2012 659,000 590,000 247 Willow Ave. 1405 Irreg. 3 Br/2 a SFR
01/05/2012 795,000 650,000 60 North Shore Dr. 4172 215x134 4 Br/2 Ba Vac
01/27/2012 399,000 340,000 117 North Bay Blvd. 56x110 Vac

Bradenton Beach

01/11/2012 94,500 87,000 107 Eighth St. S. # 3 420 1 Br/1.5 Ba Condo, bank owned
01/13/2012 424,900 390,000 1906 Gulf Dr. N. # 205 1096 2 Br/2 Ba Condo
01/24/2012 150,000 150,000 1603 Gulf Dr. N. # 2 540 1 Br/1 Ba Condo
01/25/2012 280,000 250,000 1000 Gulf Dr. N. # 8 450 1 Br/1 Ba Condo
01/26/2012 124,900 110,000 117 Seventh St. N. # 35 594 1 Br/1 Ba Condo
01/27/2012 285,000 270,000 1325 Gulf Dr. N. # 168 1120 2 Br/2 Ba Condo, short sale
01/27/2012 149,000 135,000 2312 Avenue C # 5 651 2 Br/1 Ba Condo
01/27/2012 125,000 102,000 107 Eighth St. S. # 5 440 1 Br/1 Ba Condo
01/12/2012 329,000 293,500 113 Eighth St. S. 1008 50x100 2 Br/1.5 Ba SFR
01/30/2012 399,500 376,500 307 Gulf Dr. N. 2158 50x100 4 Br/4 Ba Inc
01/31/2012 424,900 410,000 106 Seventh St. S. 3004 100x100 8 Br/7 Ba Inc

Cortez

01/09/2012 579,000 540,000 3840 Mariners Wy. # 516c 2227 3 Br/2.5 Ba

Holmes Beach

01/09/2012 249,000 215,000 4001 Gulf Drive # 111 1106 2 Br/2.5 Ba Condo
01/12/2012 399,000 370,000 213 67th S.t # 5 936 2 Br/2 Ba Condo
01/13/2012 645,000 617,500 610 Foxworth Lane 2081 3 Br/2 Ba SFR
01/18/2012 699,000 515,000 525 75th St. 2994 90x123 3 Br/4 Ba SFR, short sale
01/27/2012 1,950,000 1,800,000 104 Sunset Lane 2577 80x326 3 Br/2 Ba SFR
01/30/2012 574,000 550,000 307 63rd St. # A 1766 3 Br/3 Ba SFR
01/31/2012 2,649,000 2,100,000 2808 Avenue E 2350 4 Br/3 Ba SFR
01/06/2012 365,000 335,000 6250 Holmes Blvd. # 67 1536 3 Br/2.5 Ba TH
01/27/2012 325,000 301,000 6250 Holmes Blvd. # 27 1536 3 Br/2.5 Ba TH

Source: Manatee County Property Appraiser’s Office


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