Refinancing a Home
Do You Have to Escrow?
Many mortgage loans include automatic provisions for escrowing expenses like property insurance, real estate taxes, and other ongoing fees. To fund the escrow account your monthly payment includes an amount sufficient to cover those expenses. (That way the lender ensures you will maintain insurance and pay your taxes on time.) But you don't have to under some circumstances.
If you are take out an FHA or VA loan, the lender can require that you escrow funds for taxes and property insurance. Conventional loans do not require escrow as long as you have a good credit history and make a reasonable down payment. Still, most homeowners find funding an escrow account by making higher monthly payments to be convenient, but if you choose to take care of those expenses yourself, the choice is often yours.