Learn More about Escrow Accounts and Why You Need Them
By Jason Boone
As a home buyer one of the top questions you may have after you purchase a home is “should I be saving in an escrow account for taxes?” and the answer to this question depends on several factors.
What Is Your Financial Situation?
In 2014 every home buyer is choosing different financial vehicles or options to buy a home.
Some home buyers may be choosing a conventional mortgage while some may be using VA, HUD or FHA loans.
Although you may not need to considering saving in an escrow account thanks to your financial situation, homebuyers who choose FHA loans will have to set up escrow accounts because the Federal Housing Administration (FHA) requires this, especially when home buyers with FHA loans will buy a home with a deposit which is less than 20 percent of the purchase price.
How Do Escrow Accounts Work?
Regardless if you’re going to have a conventional mortgage or not if may be in your best interest to choose the option of saving in an escrow account because, with an escrow account you will be able to divide up your homeowners insurance and property taxes into 12 payments instead of having to pay both payments at one time.
Here’s how to Determine If you need An Escrow Account
Are you good at saving money? If not, you might be better off setting up an escrow account especially if you can’t see yourself writing a couple of big checks come tax time.
Opening up an escrow account is a better option because it will spread out your tax burden over 12 months rather than placing the burden on you to pay your taxes at once and an escrow account will also save you the hassle of having to consider applying for a cash advance loan or other risky financial options to get the money which you will need to pay for your taxes.
Pros and Cons: Saving In an Escrow Account
Four years ago when we were in the midst of the “great recession” taxes were about as low as they were going to get, but now that the economy has sufficiently recovered we can expect taxes to continue going up in the coming year.
Wells Fargo recently went on record to state that they’ve seen property tax increases by as much as 15 percent across the United States so if you’re the type of person who wants to plan for paying their tax burden now rather than later then saving in an escrow account just makes sense.
Planning On Buying or Selling In Bend?
Are you planning on buying or selling a home in Bend Oregon? If so, contact me, Jason Boone, Principal Broker with Duke Warner Realty | Skjersaa Group by calling me at (541) 383-1426 or by emailing me.