An impound account is an escrow account funded monthly by the borrower which includes a pro-rata amount of insurance and real estate taxes. When the insurance and tax bills become due, the lender pays them out of the escrow account. In many instances, you have the option of whether to Impound your insurance and taxes or pay them separately. So, what should you do?
Lenders prefer they be included with your mortgage-payment and will often provide a better interest rate. The lender will collect these payments on a monthly basis (and invest the funds for their benefit) and pay the bills on your behalf as they become due. Thus, you do not have to remember to pay them separately.
Typically, the difference in interest rate is ⅛%, and is not much of a difference in monthly payments, nor in the amount of interest paid over the life of the loan. So, do you impound or not? Contact us and we can help you make this decision based on your scenario.
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