🔍
Notary Loan Signing Agent Training: Basics of an Impound or Escrow Account - YouTube
Channel: Mark Wills
[0]
Hi, I'm Mark, I teach Loan Signing System.
[3]
I'm frequently asked by new notary loan signing
agents, 'What is the difference between an
[8]
escrow account and an impound account?' and
they also ask me, 'What does PITI stand for?'
[15]
and the biggest question I get is, 'How do
lenders actually calculate what to collect
[19]
on a monthly basis for this impound account?'
[23]
When you're doing a loan signing, the borrower
may have specific questions about their impound
[26]
account, so you need to understand how they
work.
[30]
In this video you'll learn the basics of what
an impound account (or an escrow account)
[41]
is.
[49]
First and foremost, an impound account and
an escrow account are the exact same thing.
[55]
One can say that their taxes and insurance
are impound accounts, or they can say that
[60]
they have an escrow account for their taxes
and insurance.
[63]
So, what is an escrow account or an impound
account?
[67]
But before I can answer that, it's important
to understand how property taxes and homeowners
[72]
insurance is billed.
[74]
Let's start with taxes.
[77]
Every homeowner in America has to pay property
taxes so they municipality can pay for local
[81]
roads, schools, fire departments, etc.Property
taxes are due twice a year and the homeowner
[88]
is required to pay property taxes based off
a percentage of the value of their house.
[94]
So let's just say the property taxes are 1.2%
of the home value and the home value is $100,000.
[100]
There would be a $1,200 tax bill due every
single year.
[106]
The important thing to note is that their
tax bill is typically due twice a year, so
[110]
they would have 2 payments of $600 each year.
[114]
And there are some people that will save $100
per month on their own and pay their tax bill
[119]
twice a year when their bill comes in the
mail.
[122]
Same with homeowners insurance, or also known
as fire or hazard insurance.
[127]
The lender wants to make sure that the home
they are lending against is insured in case
[131]
of fire or any other type of damage to their
investment.
[136]
No different than why you have car insurance,
except homeowners insurance premiums are due
[141]
once a year.
[142]
And just like the tax bill, some people will
save for their insurance bill and pay the
[146]
annual premium when it comes in the mail once
a year.
[150]
Pretty simple, right?
[151]
However, some people don't like to put money
aside on their own for bills that are coming
[156]
due, or frankly, some people are just not
good at saving money.
[160]
And that is how an impound account or escrow
account came to be.
[164]
The bank created a simple way for the borrower
to give them money that is due for their taxes
[169]
and their insurance.
[170]
And when the tax bill or insurance bill is
due, the bank will actually pay the tax bill
[175]
or the insurance bill on behalf of the borrower.
[179]
So the easiest way to understand an escrow
account is that it's simply a savings account
[183]
for taxes and insurance.
[185]
That's it.
[186]
So how does the bank determine how much to
set aside each month in this escrow account?
[192]
And how does that affect the borrower's month
payment?
[195]
It's easy.
[196]
Essentially, they take the annual estimated
tax bill and the annual insurance premium
[201]
and divide it by the 12 months there are in
a year.
[205]
Then they add that amount to the principal
and interest payment and that is the total
[209]
amount the borrower owes the bank every single
month.
[213]
The monthly payment will include principal,
it will include interest, taxes, and insurance
[217]
— or also known as PITI.
[221]
So in our previous example, property taxes
are $1,200 a year, divided by 12, is $100
[228]
a month.
[229]
Then let's say the homeowners insurance is
$600 a year.
[233]
Divide that by 12 and that's $50 a month.
[235]
So the bank would add $150 to the principal
and interest for a total monthly payment of
[242]
principal, interest, taxes, and insurance.
[245]
During a loan signing, the note will include
the principal and interest part of the payment
[249]
but it will not include taxes and insurance.
[252]
However, the payment letter will show the
borrower their total monthly payment, which
[256]
always includes principal, interest, taxes,
and insurance.
[260]
And now you know what PITI stands for.
[264]
This is why in my Loan Signing System, I recommend
pulling out the note and payment letter first
[269]
and put that in front of the loan docs in
your signing, since these are the 2 most important
[274]
things the borrowers want to confirm.
[276]
And now that you know what an escrow account
or impound account is, and how the lender
[280]
determines how much to collect every single
month, you should be confident the next time
[285]
there is a question that arises about the
impound account or escrow account.
[288]
Subscribe to my YouTube Channel and blog at
loansigningsystem.com to get weekly tips and
[293]
strategies so you make even more money as
a loan signing agent.
[298]
And when you're ready to become a top loan
signing agent, get my course, Loan Signing
[303]
System, to learn how to do a perfect loan
signing and get even more loan signings.
[307]
I'm Mark and I look forward to helping you
become a top loan signing agent.
Most Recent Videos:
You can go back to the homepage right here: Homepage