Initial Escrow Account Statement
If you are interested in purchasing a house using an escrow account, then you will get something known as the initial escrow account statement. This statement is mandatory and stipulated by the Real Estate Settlement Procedures Act, which was passed by the US Department of Housing and Urban Development.
The statement ensures that a potential home buyer is aware of all the terms and conditions related to their mortgage. While the rules of Act were set up on 17 November 2008, the rules came into effect on 1 January 2010.
There are many parts to the initial escrow account statement and each part is related to specific information regarding the payments that are the sole responsibility of the buyer. The first column gives the home buyer details regarding the initial payment amount, and thereafter, any amount collected by the lender to safeguard his interests is entered. Then, the total mortgage payment to be made each month is mentioned and thereafter, this amount is broken down into the principal, interest, the amount that will be kept in the escrow account and the amount that will be directed to the discretionary fund like disability insurance that a home buyer may have taken as a part of the mortgage.
In case, the interest rate and the terms and conditions may change during the course of the loan, then it should be mentioned separately in the initial escrow account state. After the initial statement is given, each year a new statement has to be given to the homebuyer by the lender.
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