Daily Dupaco

Monday, July 08, 2013

Budgeting for taxes, insurance through escrow

The "American Dream" has become synonymous with homeownership.

The reasons are clear: It's a home all your own, and it's a proven way to build wealth.

But owning a house comes with added financial responsibilities. You take on a mortgage, property taxes and homeowner's insurance payments, not to mention utility bills and maintenance costs.

This is where a mortgage escrow account can help make the cost of homeownership more manageable.

When you choose to escrow, you save year-round for your property taxes and homeowner's insurance. The expenses are automatically lumped in to your regular mortgage payments, helping you spread the costs evenly throughout the year.

"We take the responsibility of paying the taxes and insurance as they come due," says Krystal Frederick, a mortgage consultant with Dupaco. "It is one less thing our members have to worry about throughout the year."

The majority of Dupaco homeowners escrow their mortgage, a service Frederick says is always ideal for homeowners.

"Most people think there is a charge for a mortgage escrow account. It is a free service to our members," she says.

If you choose to escrow, be prepared for your monthly mortgage payments to increase when your property taxes and insurance rates go up. Dupaco is required to hold a two-month reserve for property tax and insurance increases in each escrow account.

By Emily Kittle

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