What Happens to Your Reserve Account When Taxes or Insurance Increase?

What Happens to Your Reserve Account When Taxes or Insurance Increase?

Beware! Anytime your insurance premiums or real estate taxes increase – which could be once a year – your lender can ask you to put more money in your reserve account. There are typically two ways to accomplish this.

Pay a lump sum to cover the additional costs
Increase your monthly payment to include the additional costs

Lenders don’t usually give you a long time to make this decision and then to pay the additional money; 60 days or less. Keep in mind that if you choose to ignore the lender’s request, and continue to make your same monthly payment, the lender will return your check to you. At that point, it’s considered late, and will appear as a late payment on your credit report.

For more information go to www.MakeNoMistakes.com