An impound account is a savings account that a lender requires a borrower to deposit money into in order to cover future property taxes and insurance premiums.
The money in the impound account is used to pay the borrower's property taxes and insurance when they come due. This protects the lender from the borrower defaulting on these payments, as the lender has the money to pay them directly from the impound account.
Lenders typically require borrowers to deposit 2-6 months worth of property taxes and insurance premiums into the impound account at closing. This can be a large amount of money, so it's important to factor it into your budget when you're considering taking out a loan. What is the procedure of impounding? The procedure for impounding, also known as escrowing, varies depending on the contract terms between the buyer and seller. Typically, the buyer will deposit funds with the title company or attorney at the time of contract signing. The funds are then held in escrow until closing, at which time they are disbursed to the seller.
What type of account is escrow?
An escrow account is a special account that is used to hold funds in order to ensure that they are used for their intended purpose. This type of account is typically used in real estate transactions, where the funds are held in escrow until the property is transferred to the buyer. Can a lender force an escrow account? A lender cannot force an escrow account on a borrower. However, the lender may require the borrower to escrow taxes and insurance if the loan is secured by the borrower's home. What does it mean to in escrow? When a property is in escrow, it means that the sale of the property is being finalized. The buyer has put down a deposit, and the seller has agreed to sell the property. The escrow company is holding the deposit, and will release the funds to the seller once the sale is complete. What LTV are impounds required in California? In California, impounds are required on all loans with an LTV of 80% or more.