Bank of America Escrow Agreement

A Bank of America Escrow Agreement: What You Need to Know

When it comes to purchasing a home, an escrow account is often required by lenders to ensure that property taxes and homeowners insurance are paid on time. Bank of America, one of the largest banks in the United States, offers escrow accounts to its mortgage borrowers through an escrow agreement. Here`s what you need to know about Bank of America`s escrow agreement.

What is an escrow account?

An escrow account is a separate account that is set up by a lender to hold funds that are used to pay for property taxes and homeowners insurance. When a borrower makes their monthly mortgage payment, a portion of that payment is deposited into the escrow account. When the property taxes and insurance premiums are due, the lender uses the funds from the escrow account to pay them on behalf of the borrower.

What is Bank of America`s escrow agreement?

Bank of America`s escrow agreement outlines the terms and conditions of the escrow account that is set up for mortgage borrowers. The agreement specifies how the escrow account will be funded, how the funds will be disbursed, and what happens if there is a shortage or surplus in the account.

How is the escrow account funded?

Bank of America`s escrow agreement requires borrowers to make monthly payments that include a portion for property taxes and homeowners insurance. The amount of the payment is based on the annual cost of these items, divided by 12. In addition, the borrower may also need to pay an initial deposit into the escrow account at the time of closing.

How are the funds disbursed from the escrow account?

Bank of America`s escrow agreement stipulates that the bank will pay the property taxes and homeowners insurance premiums on behalf of the borrower. The bank will also conduct an annual review of the account to ensure that the correct amount is being collected and that there is no shortage or surplus in the account.

What happens if there is a shortage or surplus in the account?

If there is a shortage in the escrow account, Bank of America may require the borrower to make a one-time payment to cover the shortfall. Alternatively, the bank may increase the monthly payment amount to ensure that the account is fully funded. If there is a surplus in the escrow account, the bank may refund the excess funds to the borrower or apply the surplus to future payments.

In conclusion, Bank of America`s escrow agreement is an important aspect of its mortgage lending process. It ensures that property taxes and homeowners insurance are paid on time, and provides a mechanism for managing any shortfalls or surpluses in the escrow account. As a mortgage borrower, it`s important to understand the terms and conditions of the escrow agreement and how it affects your monthly mortgage payment.