There are times when an escrow account is not beneficial to the borrower. When you set up an escrow account, you are asking the escrow company to play the middle man between you and the lender, property insurance company, county taxes and private mortgage insurance company regarding your payment to them.

You pay the escrow company, who in turn divides it accordingly, then passes it on to all the collectors involved. When discussing a monthly mortgage payment, have you ever heard the terms PI/TI, PI/TI/MI or just PI? These letters, when written after a payment amount, are referring to what is included in that payment. They are defined as the following:

PI: principal and interest payments
TI: property taxes and insurance payments
MI: private mortgage insurance payments

Escrow Accounts combine a number of monthly payments into one bill, easing the burden of the borrower's monthly bill-paying chores. It also helps the borrower to budget. If the borrower has his property taxes and home insurance fees escrowed, he no longer has to rely on his own self-discipline to save up each month so that he will have enough funds when it comes time to pay the annual fees. The funds for these bills are saved through the required escrow payments.

The advantages to escrow accounts:

Requiring a borrower to escrow his property tax payment provides security for the lender from liens that can be placed on the property if the borrower fails to pay these taxes. These tax liens are given priority over any other liens, regardless of the order in which they were placed on the property. This means if the lender had to foreclose on the property, he would then be responsible for payment of the tax liens. Likewise, escrowing home insurance payments protects the lender from liability costs not covered under a policy because it has lapsed from lack of payment. We strongly recommend that any seller considering seller finance request that his buyer escrow the property taxes and insurance.

The disadvantages to escrow accounts:

There are times when an escrow account is not beneficial to the borrower. If the borrower has a large property in which the annual property tax and insurance payment is significant and he also has a large degree of self-discipline, he can opt to make the payments himself annually and earn interest on the funds up until the time they're due. This is also a great way for a property manager with a large clientele to earn an extra income.

Paul Pratt

Our team's diverse backgrounds and investing experiences include a high school teacher, a college drop-out, an MBA graduate, a waiter, a secretary, a real estate agent, a banker and a stay-at-home mom. Despite our diverse backgrounds, we shared a common, life-changing event; we all made the decision to truly change our lives. Although our starting points couldn't have been any more different, we each discovered that our journey toward financial freedom began with real estate.

Most real estate investing "gurus" offer a "one-size-fits-all" approach, providing generic ideas and uncertain results because their philosophies fail to consider individual experience and circumstances. Our personalized approach, the understanding that each of us has a very unique background and set of circumstances, is what has made MyreiTeam’s system so effective.

After years of learning "the hard way", we are now living our dreams. The high school teacher now has the ability to spend more time with his most important students, his own kids. The college drop-out is retired and enjoying exotic fishing and hunting trips. The waiter is now waited upon, vacationing and skiing in the world's greatest resort towns. The MBA grad and banker own their own real estate investing firm and the secretary now manages her own employees who are devoted to her real estate empire. The stay-at-home mom has moved her family into a luxurious 8,000-square-foot scenic mansion.

All of the wealth and success we have been enjoying has been better than we could have dreamed. But even more satisfying and phenomenal was the rate at which the Personalized Investor Matrix™ was creating wealth for our friends and family who were using it to get started in real estate. Now we want to share this revolutionary approach with you. Our powerful, personalized investing system is now at your fingertips.

MYreiTEAM is exactly what it says, your team! We are here to provide you with all the help and support you need to succeed. If you have investment questions, need some support or motivation, or if you just made an exciting deal and just want to share your experience with somebody, post your question or experience on the My REI Community board. One of our team members will quickly respond to your question with expert advice. The point is we are committed to your investment success and are excited for the opportunities that lie before you. Welcome to MYreiTEAM!