An escrow account for taxes and insurance is generally required for Conventional loans that have an LTV over 80%. However, LTV is not the only factor in allowing escrows to be waived. Underwriting will make the final determination.
If you were to fall behind on your property taxes, you could end up with a lien on your home – and eventually lose it. If your homeowners insurance lapsed and your home was seriously damaged, the lender’s investment would be in jeopardy.
An escrow account offers two benefits for you:
• You’re automatically putting money away for expenses each month instead of having to budget for a few big payments.
• Someone else is managing those taxes and insurance bills for you.