IMPOUNDS aka reserves aka escrow account
This page is to hopefully give you a better understanding of the collection of "impounds" also known as "reserves" or an "escrow" account required to set up for your Taxes and Insurance due. (There is also an option to waive the escrow account or the collection of impounds/reserves - this will typically cost the borrower approximately 0 - 0.25%)
The table below shows how many months of tax impounds are generally required, should you chose to have an impound account with your loan.
Impounds (aka reserves) are for you, the borrower to ensure there are monies to pay your taxes and insurance when they are due. The requirements are established by each individual lender and we are to follow the lenders instructions related to impounds. We do not establish the impound amounts and the chart provided is for use as a general guideline only.
Hazard Insurance Policies
A purchase transaction requires the 1st year's premium to be paid in advance at the time of closing. You will also be required to have a 2-3 months reserve to be deposited into the Escrow Impound account.
For a refinance, there should be 6-months remaining on the existing hazard insurance policy. If there is less, you will be required to pay a full year's premium at the close of Escrow, plus 2-3 months reserve to be deposited into the Escrow Impound account.
Remember! The higher the # of months required to set up a new escrow account also means that any current impounds held by your current loan servicer will be also larger and refunded to you approximately 3 weeks after closing.
NOTE: We follow the insurance requirements as established by each individual lender and responsible for following the lenders instructions related to insurance. We do not establish the requirements and the above is provided for use as a general guideline only.
The table below shows how many months of tax impounds are generally required, should you chose to have an impound account with your loan.
Impounds (aka reserves) are for you, the borrower to ensure there are monies to pay your taxes and insurance when they are due. The requirements are established by each individual lender and we are to follow the lenders instructions related to impounds. We do not establish the impound amounts and the chart provided is for use as a general guideline only.
Hazard Insurance Policies
A purchase transaction requires the 1st year's premium to be paid in advance at the time of closing. You will also be required to have a 2-3 months reserve to be deposited into the Escrow Impound account.
For a refinance, there should be 6-months remaining on the existing hazard insurance policy. If there is less, you will be required to pay a full year's premium at the close of Escrow, plus 2-3 months reserve to be deposited into the Escrow Impound account.
Remember! The higher the # of months required to set up a new escrow account also means that any current impounds held by your current loan servicer will be also larger and refunded to you approximately 3 weeks after closing.
NOTE: We follow the insurance requirements as established by each individual lender and responsible for following the lenders instructions related to insurance. We do not establish the requirements and the above is provided for use as a general guideline only.
Funding Month November
December January February March April May June July August September October |
First Payment January
February March April May June July August September October November December |
Impounds Collected @ Closing4 Months Plus 1st Half Paid
5 Months Plus 1st Half Paid 2nd Half Taxes Due Plus 2 Months 2 Months 2 Months 3 Months 4 Months 5 Months 6 Months 7 Months 8 Months 1st Half Taxes Due Plus 3 Months |
Any Current Impounds held by your current loan servicer should be returned to you approximately after closing.
If you have paid your Half Taxes for the year, these need to be recorded with Title - otherwise you will need to pay the half taxes. These should be returned to you from the County upon recording of duplicate taxes.
If you have paid your Half Taxes for the year, these need to be recorded with Title - otherwise you will need to pay the half taxes. These should be returned to you from the County upon recording of duplicate taxes.