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Is interest paid on money the mortgage company puts into escrow while repairs are being made to the homeowner's property?

By debbie_purofirst799 from KY Jul 16th 2014
Reply

No, the escrow account is just an account that is holding the money while the repairs are being made on the property.

Jul 16th 2014

I do not agree with Steffnie. The lender pulls the repair money from their line of credit, or other source, depending on the loan type, and they pay interest to their source while the money is sitting in their vaults, so they have to charge you, just as if you already took the money out and spent it.

Jul 16th 2014

If the account is made for repairs that must be done for financing to take place, then it is not a line of credit, it is an escrow holdback account for those repairs. The appraiser probably listed the appraisal 'subject to' certain repairs which must be done within a certain time. If it is an escrow holdback account then Steffnie is right and there is no interest.

Jul 16th 2014

However, the escrow holdback account would be money that the borrower puts in to guarantee to the lender that the repairs would actually take place. If the lender is lending you money for repairs then there would obviously be a cost of lending and an interest rate attached.

Jul 16th 2014

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