As it is with most people, you probably bought your house through a mortgage and you and your lender must have agreed on the mode of payment. Usually, the payment is divided into three parts; one part goes to the principal, another to the interests and the last part goes to your escrow.
The escrow account is an account that’s managed by the mortgage lender and used to cover certain fees like the cost of the mortgage, property taxes, and private insurance. At least 20% of the home’s value goes into the escrow account every month. The mortgage lender maintains the escrow account until you pay your mortgage loan completely. This account is managed by the lender and is used monthly to pay the cost of the mortgage, property taxes, and private insurance. The escrow account is held until the house is paid off in full and every year when you need to pay taxes or insurance, money is removed from your escrow account to cover the bill.
However, what happens to your escrow when you decide to sell your home halfway through the year? Since you’ve been consistently paying money into your escrow account, then there’ll still be some funds there. But you want to move out and sell the property, which means you don’t need to pay taxes, insurance, or a mortgage loan out of your escrow account. So, what do you do next? Continue reading to learn more:
What happens to escrow when you pay off your house?
Now that you already know what an escrow account is, let’s go on to what happens to your escrow when you sell your house.
Most people think they have to do some paperwork or pay certain fees to get the money from their escrow after they sell their house. Well, you don’t have to do any of these, because the sale of your house automatically terminates any payment into the escrow account. When the escrow account has been canceled, it’s only right that you get the balance of what is left in your escrow account from the lender.
However, you don’t get the balance on your escrow account just because you want to sell your home. Let’s take a look at how the escrow account work during different phases:
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During the sale
During the sale process, the escrow account will still be managed by the mortgage lender and you’ll continue to make payment into the escrow account. Just because you’re in the process of selling your house doesn’t mean you’ll stop paying taxes and insurance.
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Property Taxes
The closing agent is responsible for confirming the payment of the property tax. If payment was made from the escrow account after the sale of your house, then you’ll get a refund for the overage. But if the bill is yet to be paid, the seller has to complete the payment from the profit of the sale.
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Insurance Payments
The insurance fee is usually paid in advance from the escrow account, so you shouldn’t be owing any insurance after closing the sale of your house. And if there’s any glitch in payment, you’ll be refunded duly.
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Refund of the credit balance
The lender will not close the escrow account until the loan has been paid and completed. The lender will give you a refund check after you complete your loan payment. This check takes a while to arrive.
Obtaining Your Refund
Your mortgage lender will contact you after the sale of your mortgaged home however you won’t be getting a refund or your old mortgage loan’s escrow account balance until you complete your loan payment. If your mortgage lender confirms that you’re not owing any remaining money then you’re eligible for a refund of your escrow account balance. You should get the balance within 20 business days, otherwise, contact the lender immediately.
Conclusion
If you’re looking to sell your house fast so you can get access to your escrow balance quickly, you’re better off selling to a cash home buyer. At Best Offer OKC, we buy houses Oklahoma City at a fair and reasonable price. We’ll only move on with the sale when you accept our offer; plus our offers come with no contingencies. We’re your best bet if you’re in search of the best cash home buyer in Oklahoma City. Call us today!