To Impound or NOT to Impound

What does “impounding” mean?

Impounding: Including your property taxes and insurance payment along with your monthly mortgage payment. Not impounding: Paying the property taxes and insurance once a year on your own.

What should YOU do? The answer more or less depends on your personality: Are you the type of person who does not want to think about paying your property taxes and insurance at the end of the year? Would you rather it be billed monthly so it’s done and over with? If so, you may want to impound. Keep in mind that impounding requires a little more money out of pocket at the close of escrow. Specifically, you will need to pay a one-time cost of approximately 6 months of property taxes and 2 months of your insurance as part of your closing costs.

OR

Would you rather pay your property taxes and insurance on your own and keep that money in the bank until the payment is due? Do you have plenty of funds and are not concerned with a bill at the end of the year? If so, you may enjoy not impounding. No impound deposit is required.

Good News! There is no wrong answer. Talk it over with your loan officer and think about which option works best for you.