December 2010 Vol. 5 No.12

• The Nitty Gritty Details of Your Escrow Account • December's Home Value Improver • About Us

The Nitty Gritty Details of Your Escrow Account

If you are one of the millions of people who have bought or refinanced a home in recent months, you know that the bank sends some of your money from your real estate closing to a third party to keep in escrow. This money is set aside to pay your property tax and homeowner insurance bills.

You assume you earn interest on it, and it all seems straightforward and safe, so you've probably never investigated the issue. But remember what they say about assuming. If you want to start 2011 on the right foot financially, include monitoring your escrow on your New Year's Resolution List. And here are two ways to do just that.

Make sure payments are being made.
Each month, you pay one twelfth of your annual projected property tax and homeowners insurance to your lender (this is the T and I in your PITI payment.) The lender sends it to a third party to hold on to it, and then the bank makes your quarterly real estate tax and homeowners insurance payments with it.

Many people go about their lives assuming those property tax bills are being paid. While they usually are paid on time without any problems, mistakes can happen. A local assessor I know tells me that homeowners should check with their city or town to make sure the tax bills are being paid. He explained that checks get misplaced or are sometimes never sent. Many municipalities have even set up their websites so that homeowners can check their payment status online.

You should also check with your homeowners insurance provider. You would hate to find out the hard way if your home insurance had lapsed. If you have a "rider" attached to your insurance for a pricey item such as expensive jewelry or artwork, you need to take care of those payments yourself.

Check your statement.
As a mortgage broker, I feel strongly about homeowners tracking their escrow and was recently approached by the National Association of Realtors to discuss it. Your bank is required to send you a statement each year detailing your escrow account. Look closely at that statement and make sure everything adds up. Is the proper amount left after having paid the taxes and insurance?

Fortunately, the industry is regulated fairly tightly. Banks are required not to hold an amount of money larger than the size of two months' mortgage payment. Some states require banks not even keep that much. Some states require that the equity bear interest that the homeowner is entitled to. If your escrow account is negative, don't worry. It is probably because there was a property tax increase.

Keeping a close eye on your escrow account to ensure proper, timely payments are made and that the amount in your account makes sense at any given time.

December's Home Value Improver

7 Steps to Lowering Your Gas or Oil Bill

If your last gas or oil bill gave you agita, you probably dialed the heat down and grabbed an extra sweater or two. If so, I commend you for taking this step, but don't stop there. There are several things you can do to save on home heating.

  1. Check the hot water temperature.
    If your hot water temperature is set very high, you are wasting the oil it takes to raise the water to that temp. Keep your setting low. Most of the time, it's warm water you're after, not hot.

  2. Service your oil burner.
    Having your oil burner serviced pays off in spaces. A mucky filter will make your whole heating system run less efficiently, which means you're paying more money for less heat.

  3. Weatherproof doors and windows.
    Drafts are not your friends. Whether they come in through loose windows, under doorways, or even through closets that are neither insulated or heated, keep them out.

  4. Look into new insulation.
    Not only will a well-insulated house save you on your energy bill, it will save you on your taxes - and I mean real money. There are federal tax credits.

  5. Try a heated mattress pad or blanket.
    If you really want to crank the heat down at night, but don't want to wear two pairs of fleece pajamas, try a heated mattress or blanket. You'll never get into a cold bed again.

  6. Install a programmable thermostat.
    Heating an empty house is like tossing $20 bills out the car window on the way to work. A programmable thermostat is the answer. You can keep the temperature comfortable when you are home and awake, and low when you are out or asleep.

  7. Have an energy audit.
    Look into having an energy audit of your home. Your local electric company likely sponsors them for free. You might be surprised at where you are losing heat!

Westchester Mortgage

'Tis the season for family, friends and fun and I hope you take the time to enjoy it all. I also hope that if this past year has included the decision to buy or refinance a home, that you can look back and feel good about the process you experienced, the advice you received, and the outcome you achieved - especially if Westchester Mortgage was part of the equation!

I want to close the year by thanking you for subscribing to this newsletter, for reaching out with your questions about home buying and refinancing, and for including me in the process as your mortgage broker.

I was excited to be asked by the National Association of Realtors to comment on the topic of escrow accounts recently, and it reminded me of this important component of your home financing. I hope you find our article useful.

Enjoy the holiday season!

Best regards,
Debbie Siegel
Westchester Mortgage

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