After much research and forum browsing, I have started my marketing for lease option deals. Before I complete my first deal, I have a question regarding the costs of the motivated seller’s property.
When I’m making my payments to the seller, should the tax and H.O. insurance portions be built into that amount and escrowed? Or should they be paid out separately to the escrow account and insurance carrier?
Most mortgage companies set up an escrow account. As a buyer I want to pay the mortgage company directly to make sure the seller does not keep the money. As a seller I want to collect the money from the buyer so I can make sure the mortgage is paid. I also want the taxes and insurance paid monthly either as buyer or seller. It is just easier to pay a little at a time instead of all at once unless it is small amounts like the two I own in Killeen.
There are escrow companies that will collect the funds from you and pay the seller, taxes, insurance and mortgage company or any scenario you need. It can get bad quick if the seller decides to keep your payments. I had it happen and lost the property.