What Is a Loan Impound?

A loan impound is defined as the process where the mortgage lenders collect your tax and insurance payments along with the principal and interest as part of each month's mortgage payment. Loan impounds are implemented to ascertain that your property taxes and insurance are paid in a timely manner.

Benefits

A loan impound can prove to be beneficial if you don't like the idea of tracking your due dates for payments or writing payment checks. Also, many people do better at saving money for big expenses like homeowner's insurance and property taxes if a monthly allotment goes straight to an escrow account for safekeeping until those bills are due. That way, they never see the money, and won't be tempted to spend it on something else.

Insight

If you need help with the loan impounds or escrow accounts or if you have any questions, you should contact the U.S. Department of Housing and Urban Development, or your state government.

Beware

If you are signed up for the loan impound or an escrow account, it can be difficult to keep track of your money. This is due to the fact that most home mortgage loans are eventually resold in the secondary market. The lender that underwrote your mortgage when you signed the papers may not be the same one you're dealing with now.

Fact

Loan impound is also referred to as an escrow account.

Tip

Having a loan impound might add up a huge amount of money at the time of closure. You should talk to your loan officer about these details before signing up for the loan impound.

References

• Oregon House Market
• EscrowHelp