A Pain Free Guide to Understanding Escrow

Escrow is the final piece to understanding what makes up a mortgage.

What is Escrow?

Additional funds collected by your lender with your mortgage payment that is set aside to pay your property taxes, home insurance, and flood insurance if you have it.

Is it required?

Many lenders do require escrow for taxes and home insurance. Ask your lender what your options are on your loan.

Why is it usually required?

It keeps you from having to save separately for large bills. It allows you to not have to worry about due dates, and rest assured that the payments will be made.

How is it calculated?

Usually, your monthly escrow payment is divided by the estimated annual costs for property taxes and insurance by 12. Then, a cushion amount is added to help make sure there will be enough if the bills go up

What are those calculations based on?

  • Closing documents
  • Insurance company
  • Local property tax rates

What is an account analysis?

Sometimes called an escrow review, this is when your lender or mortgage servicer reviews your escrow account yearly. They compare the collected amount to your current bills for taxes and insurance to be sure the monthly payment is correct.

Can it change the cost of my mortgage?

Escrow does not change the amount of your mortgage, but it may change your monthly payment if your property tax or insurance bills go up or down.

What happens to the money?

The money is used to pay the property tax and insurance bills when they are due. If there is too much or not enough money when your mortgage company does the escrow analysis, they will contact you to review your options.

Learn More About Mortgages

6 Unique Ways to Come Up with Your Down Payment

Sure, 20 percent down payments rock, but what average person has that much money they can let go of at one time? I don’t know many, and I certainly wasn’t one when I purchased my first home. You don’t need to feel discouraged if you can’t fork over that much money for a down payment. There are plenty of borrowing options that include paying less up front.

Need help thinking of creative ways to come up with funds for a down payment? Buying a home is stressful and takes more money than most people realize. Let’s get creative and break convention for a moment as we discover some unique ways to purchase that little slice of freedom!

  1. Assistance programs. If you’re a first-time homebuyer, chances are there’s a program that may help you in either coming up with funds or only requiring a certain down payment. Local programs are the best to look into, but there are a couple federal ones you may qualify for as well.
  2. Yard sale. You’re moving from somewhere, right? Purge the old and make some cash in the process! Sell furniture that won’t fit your space, or items you just don’t like or use. Then you’ll have more money and less to move!
  3. Ditch your car note. I’ve never had a car payment, and I don’t plan on it. Swap out that newer car with a hefty monthly payment for something less glamorous or try to buy a cheaper one out right. This is really important because even if you cash in your car, you may still have room to buy a cheaper car and aid your down payment. That extra cash can go toward your mortgage!
  4. Try a side job. Make the most of a hobby or something easy to do on the weekend to make extra money for your home purchase.
  5. Tax refunds. Other than paying off debts, using a tax refund towards a home purchase is a GREAT idea!
  6. Register for it (sorta). If you’re getting married, having a baby, or moving in with someone, or celebrating any life event where family and friends want to contribute, ask them to contribute to your down payment in lieu of buying presents.

That dream home can be a dream come true home! Think ahead, stick to your plan, and consider the long term affects. Play smart and work hard. Owning a home isn’t easy and paying for it takes responsibility, discipline, and prioritizing, but you can do it!

Still planning to buy that home?

Keep Planning!


Oakbur Quill Co.


9 Spending Habits that Will Change the Way You Shop

We’ve all had a long day where retail therapy has felt like the solution to our blues. While it may be instantly gratifying, we usually end up with something we don’t need and a case of buyer remorse. So instead of repeating these habits, let’s look at some easy ways to reduce our spending and buy smart when we do go to make a purchase.

1. Plan. Ask yourself, “Is this a planned purchase?” Now this isn’t to say you can’t grab lunch when that meeting runs late, or that you can’t get something on a whim. This is to say you should limit those times. Working off a budget demands discipline and spontaneous spending throws a wrench in that.
2. Imagine it in a month. Obviously, food and other items are exempt here. Think to yourself, “Will I wear this in a month?” Are you going to be bored with the item, buy something new to replace it, forget about it? If so, chances are it’s not a good investment.
3. Improvement test. Test your purchase. What will it add to your life: clutter, an avenue to buy more things to support it, nothing, or make you happy for a bit? Again, these are not valid improvements. Yes, this encourages you to buy based on practicality instead of desire. It’s not a ton of fun now, but when your savings allows you to buy that new car for your growing family it’s totally worth it.
4. Check your emotions. Buying on emotion can be a bad way to gage necessity.
5. Keep your receipts from the days purchases. Write down how much you spent after adding up all your receipts. This will help you realize how things add up.
6. Actually balance your checkbook. It’s not a lost art.
7. Learn to change your mind. When you check out and things are more expensive than you thought, put stuff back or ask for things to be taken off. It’s okay to even walk away. You are not obligated, unless it’s a service that’s already been performed.
8. Research. Having an idea of prices before you buy something is so helpful and keeps you realistic. It also can keep you from wanting something you don’t need or can’t afford at the time.
9. Put the credit card away. Emergencies, planned purchases, or gas to keep your credit going these are the only things you should routinely put on your credit card.

Keep Saving!

Reward yourself along the way as you learn to do more and more of these! See how much you save as you implement practices to shop smarter. Have a friend do it with you so you stay accountable. Set your intention before you begin. Are you wanting to change spending to take care of debt, save up for something specific, for a new family member, or are you just wanting to lead a less emotionally spending life? Find your motivation.

Understanding How Your Credit Can Be Good News for Your Interest Rate

So you’re taking on a mortgage, or considering it – congratulations! Also, good job. Educating yourself in financial matters is super smart (though seriously daunting and intimidating sometimes). When it comes to interest rates, it can be easy to dismiss the steps you can take to try and get better rates. However, there are many things you can do before even applying for a mortgage to improve your ability to get a lower interest rate.

It begins with keeping the following in good standing: credit, debt, savings, income, and other assets.

Having a low interest rate is likely going to be important to you in the long run. While a high interest rate may be easy to overlook when purchasing a home, you may feel the financial impact of a higher rate down the road. A higher interest rate will result in you paying more over the lifetime of your mortgage2.

Good credit can result in lower interest rates when you go to purchase a mobile home2. Many people don’t realize how important it is to keep your credit score up or to work on getting into a good credit score range.

When applying for a mortgage or preapproval, it’s also a good idea to keep an eye on your credit report and to promptly correct errors1. You should avoid doing anything that may negatively impact your credit throughout the process of purchasing a mobile home; this includes applying for new, additional lines of credit1.

While your credit score isn’t the only key to a low interest rate, it is one of the key factors2. Your credit report is the main record lenders have of how you spend money. It tells them whether you pay on time, if you pay what is owed, and how consistent you are. It’s riskier for them to lend when your credit score is low in terms of your perceived ability to make payments. It’s similar to a school giving a better scholarship based on grades. While it’s not always fair to those who really have to work for a high grade versus those who are naturally good test takers – both got the same grade. The same is true with credit. If your credit has seen better days, you can improve it with hard work.

Another key factor is your debt1.  A lot of debt may deter a lender from lending to you, or may negatively impact the terms of the loan.  Lending decisions are typically made on a case-by-case basis, but you definitely want to pay off as much as you can before taking on a home loan. Many people only see their home as an investment and not as debt, which it is. A mortgage is probably the biggest loan you will have in your life. That loan can have big rewards, yet it also requires big responsibility. The best thing to do is either consolidate or pay off debts that you can, or at least have proof that you can consistently pay towards your debt.

Your savings and income may also impact your interest rate and the terms of our loan.  Starting to save is obviously amazing when considering a mortgage. It also can look good when your interest rate is being decided. Savings can demonstrate to a lender that you can pay your mortgage payments. This can also be shown if you have consistent income. Having a steady job or creating a savings budget could help you when trying for a better interest rate. Assets such as land, boats, cash settlements, etc. could also positively impact that way that you appear to a lender.

Understanding your credit is the key to reaching for a better interest rate. Don’t just accept a high rate. You’ll pay for it later. Do what you can to make your credit shine!

Start Improving Your Credit Today!

  1. Consumer Financial Protection Bureau. 16 August 2018. How does my credit score affect my ability to get a mortgage loan? https://www.consumerfinance.gov/ask-cfpb/how-does-my-credit-score-affect-my-ability-to-get-a-mortgage-loan-en-319/

2. Consumer Financial Protection Bureau. 16 August 2018. Seven factors that determine your mortgage interest ratehttps://www.consumerfinance.gov/about-us/blog/7-factors-determine-your-mortgage-interest-rate/


Closing Costs – What They Are and What to Expect

Closing costs and the process of closing are the final moments before your mortgage, title, and ownership are signed off on and become your responsibility. This can be nerve-racking and overwhelming, so let’s do our best to take the guesswork out of it.

Throughout the process of purchasing your mobile home, you’ve probably had an idea of what you’ll be paying in closing costs, but here we uncover the details. We’ll also go through what to expect during your closing.

Costs –

Usually closing costs are typically about 2% – 6% of the purchase price, but this amount can vary. These costs pay for things like documentation, labor, and legal representation during the closing for the home. These costs reflect a combination of many smaller costs that equal the final payment.

The buyer can go through closing without contributing to the cost by either: asking the seller for part or all the closing cost (depending on the loan agreement), or closing costs can be included in the financing.

Here are some examples of things that may be included in closing costs:

  • Document prep
  • Recording fee
  • Flood certificate
  • Survey Fee
  • Deed Stamps
  • Title Fee
  • Owners Title Insurance
  • Application fee
  • Assumption fee
  • Attorney fee
  • Prepaid interest
  • Loan origination fee
  • Points
  • Mortgage broker fee
  • Mortgage insurance app fee
  • Upfront mortgage insurance
  • Applicable loan fees
  • Inspection (if buyer chooses)
  • Appraisal
  • Possible HOA
  • Homeowners insurance premium
  • Property taxes
  • Title search
  • Title insurance

This is not an all-inclusive list and it will depend on the lender and your specific situation as to what costs you have to pay. Closing costs can really be a burden to the buyer if you don’t save and plan ahead.

The Process –

Before closing, you’ll schedule a walk-through to ensure all items were taken care of that the seller promised to address.

Learn More About Closing

The actual closing process involves paying those final fees and signing a lot of paperwork. You’ll accept your loan, your title company will prepare documents, and transfer money for you.

More than likely you’ll be offered electronic signing.  It may be difficult to review documents on a cell phone, so it would be best to review on a tablet or computer.  Consider printing the documents for easy review, as well as writing down any specific questions you may have.

Also, remember that there are aspects of your closing costs that you can shop for. Feel free to ask questions, research, and find the best deal instead of taking what you’re presented with. When you don’t know what certain things mean it can feel frustrating to have to ask, but you should. Accepting what you don’t understand is not going to help you.

We wish you a smooth closing with plenty of explanation!

Tell Me About Escrow!

Rent to Own Versus Financing

From just the name, you might think that renting to own is the best option around. Many people believe this without really understanding what the process looks like. However, there are some complexities about the rent to own process that you’d benefit from learning about as a homebuyer. You may learn that you would be better off going the route of financing your home.

Rent to Own

  • Renter makes payments to seller to possibly reduce final cost of home1
  • Based only on a possibility for buyer to purchase home in the future1
  • This option works mostly as a waiting period for renters to decide if they want to be buyers, allow time to improve credit, or pay towards the final cost.1
  • First premium payment is non-refundable (like a down payment) if renter decides not to purchase – this is not refunded.
  • You should discuss which party – you are your landlord – is in charge of maintenance
  • The ultimate purchase price may be unsettled as prices in the area can fall or rise over time, but the seller may be willing to lock in the future purchase price.
  • You may want to consult legal counsel to draft or review a rental agreement so that you know what you’re getting into and you have all your bases covered.


  • With the help of a lender, a buyer can purchase a home through financing. This means you pay on a loan for a duration of time at a certain interest (this could be fixed or adjustable).
  • This is a loan with the full intent to own. The only way you wouldn’t end up keeping the home is if you miss payments repeatedly or default on the loan.
  • Good for most common buyers who don’t have the amount of cash available to purchase a home outright. Allows a payment system (mortgage) for a buyer to pay towards.
  • Credit and income are very important to qualifying for a mortgage.
  • With financing, you inherit all the responsibility of the home because you become the owner. You may also have to pay for home maintenance and repair, taxes, insurance, and private mortgage insurance (“PMI”) if your down payment is below 20 percent.

Both options have pros and cons and some complexities that will arise with whatever your specific home situation is. The best thing to do is to gain a full understanding of each option as well as to decide whether you want to own your home outright, or else work towards owning your home through a rent to own option, knowing that ownership may be less certain if you go that route.

Be Financially Prepared For Either!


  1. The Balance. 11 June 2018. Pros and Cons of Rent to Own: A Guide for Buyers and Sellers.  https://www.thebalance.com/what-is-rent-to-own-315664

Oakbur Quill Co.

5 Steps to Financial Literacy

Financial literacy just means being smart/responsible with your money. In the same way we are “literate” and can read – in this instance if we are financially literate – we know and understand our finances.

Financial literacy is a practice and a journey. Just like with reading, the more you do it the better you become. You learn to read more complex content and your skills improve – the same is true with money. This also means that it’s learned and if you aren’t in a good place with your finances – you can be! Likewise, if you’re gliding smoothly with your finances – now is your chance to be better or perfect your skills.

Let’s look at the five basic steps that can lead to financial literacy:

  1. Understand your current financial status. This can’t be overstated. Because of automation and paperless statements, many people don’t even keep up with their paychecks. It’s a lot harder these days to know your average paycheck after insurance and taxes. It’s also easier than ever to live above your means by deferring your payments or charging a credit card. Print out statements, watch your bank activity, and learn the patterns of what you get paid and how you spend it. Without this understanding, you can’t be effective.
  2. Save. Once you take a look at your current financial status – you’ll realize (like most of us) that you can stand some change. The best change to make first is to begin saving or saving more. This does not have to be 401K or big accounts. Start small. Try a dollar a day, or a dollar a week and keep up all year. The discipline of saving has little to do with how much money you make and much more to do with how willing you are to prioritize it. There is also no standard. If you can’t save a lot – that’s okay! You’re still doing it!
  3. Budget. Now that you’re willing to save, you can budget. Gather your bills and monthly payments so you can record actual amounts for your budget. Understand if you don’t budget at all, the first month is just a projection that you’ll try to match. However, it will take adjusting. Especially, as you begin to watch your accounts, cut unnecessary spending, and think more frugally. Budgeting may be something you refresh every month, it may be something you outline and put on the fridge and stick to for the year, it may be mental list. Everyone is different and everyone benefits from budgeting.
  4. Make adjustments. Budgets can be uncomfortable. They demand financial change. This can be hard to understand as most of us have inherited the money mind of our parents or guardians, but budgets can make us question whether what worked for them will work for us. If debt is burdening you – start paying it off, begin to only pay cash, or stick to necessities. Ask for help
  5. Practice good credit card habits. This one could be its own post. Using credit cards is a necessary evil if you want to buy a home or newer car. Few people can pay out of pockets for these things, and you are required to have credit to be given loans for either one of those purchases. Be consistent with paying monthly balances, only purchase needs, only purchase what you could easily match in cash.

Get More Financial Tips!


What Are the Parts of a Mortgage Anyway?

For the first-time homebuyer, or someone unfamiliar with purchasing – the world of mortgages and financing can seem like another language. So, let’s do some translating.

Let’s start with the basics. What does mortgage really mean?

A mortgage just means there is an agreement between the buyer and a lender. The lender agrees to loan the buyer money, but if the buyer doesn’t repay the loan, they have the right to take the property.

Who offers mortgages?

Banks, mortgage companies,  and credit unions all can offer mortgages.

The process of these lenders funding money to purchase a home is known as financing.

With that in mind, let’s now look at what makes up a mortgage payment. Your mortgage payment has four parts: principal, interest, insurance, and taxes.

Principal: The loan amount you have to pay back to lender

Interest: Percentage that the lender charges you for borrowing the principal. Mortgages can either be fixed interest rate or adjustable interest rate. Fixed rate mortgages have an interest rate percentage that stays the same for the entire loan term. Adjustable rate mortgages will change percentage over the loan term.

In fixed rate loans – principal and interest work like a see-saw because of a process called amortization. Think of your payment as the middle, the fulcrum, the balance of the see-saw. Your principal sits on one side and your interest sits on the other side.

In the beginning, your principal payment is on the ground and your interest payment is high in the air with feet dangling down. To start, your monthly payments go toward paying off more of your interest than your principal. As you get toward the end of the life of your loan, monthly payments go more toward your principal, than your interest. At the end, your interest is low to the ground and the principal is high in the air.

Taxes: Amount added to your monthly payment (if your account is escrowed) to pay for the property taxes on your home. Usually property tax is paid to your local government. Sometimes an escrow account will be created for you. The mortgage servicer collects your money in an account, separate from your mortgage, where funds are held to pay property taxes and insurance.

Insurance: There are a few types of insurance that may be escrowed: homeowners, flood, and mortgage insurance. Homeowners insurance is the amount you pay to insure your home against losses or damage from something unexpected, like a fire or burglary. Flood insurance is what you pay to protect your home against flood damage if it’s in an area at risk for flooding. Mortgage Insurance (sometimes called Private Mortgage Insurance or PMI) is usually required by your lender if you have a down payment lower than 20 percent of the purchase price. This insurance is to protect the mortgage company from you defaulting or failing to make payments.

Let’s see those four parts in action.

VMF Mortgage blog Graphic FNL2

EX: Principal – $63,000 x Interest rate – 7% – 20 year loan = $488 monthly payment

*Due to interest over time the amount your loan was for, say $63,000 will cost more over the lifetime of your loan (20 years). In this example, if you paid your monthly payment as listed for 20 years your final cost would be $117,225. Without early or higher monthly payments, you’d pay approximately $54,225 in interest as well as your loan amount.

*Your specific loan amount will be broken down for you by your lender. Check out this mortgage calculator to get a better idea of your specific situation. See how the loan estimate looks here!

Things to remember:

*Monthly payments are not just your principal and interest. With the example, $488 is not all you’ll have to pay. You’ll have to pay taxes/insurance, and utilities. Leave room for other homeowner fees.

*Paying interest means you’ll pay back more than you originally borrowed.

*Your interest rate and credit matter. Better rates come with better credit. Try to keep your credit up. It will pay off. Seriously.

*With a fixed rate mortgage, lower payments over time will cost you more. If you can afford it, consider a shorter loan term. It may feel like it’s more expensive because you have higher payments, but will save you money in interest in the long run.

Learn More!

Pre-qualification, Pre-approval, and What You Need to Know

Both pre-qualifications and pre-approvals are indications of what a bank or creditor may be willing to lend but are not loan guarantees. The most important aspect is that they show the seller you are serious about buying while giving you an idea of what you may be able to borrow. Both processes will vary depending on the lender that you select. Before you request a pre-qualification or pre-approval, be sure to ask your lender about how the process will flow, potential associated costs, whether your credit report will be pulled and if documentation will be required. Ask for a list up front so you can know exactly what you’ll need to provide.


What: A letter from a lender that says you will likely be able to get a mortgage loan up to a specified amount

Who: A bank, credit union, or financial entity writes a pre-qualification for you. Which means they are looking at your debts and income to decide your credit worthiness.

When: Usually this is the first thing a homebuyer does when looking for a home

Cost: Free (usually)

Where: Online or over the phone (depending on entity)

Why: Potential homebuyers use this to see how much of a home they may be able to afford, or in some cases if they can afford a home. This appeals to sellers because it shows them as a buyer you are serious and can get the loan you need to purchase the home.

What you’ll typically need to provide: Usually potential lenders will look into your debts and income. Lenders usually pull a credit report to evaluate before they write the pre-qualification.


What: A letter that tells you what a lender is willing to lend you based on financial documentation you provide. Looks at financial history, income, and stability.

Who: A bank, credit union, or financial entity works on a pre-approval for you. Which means they are looking at your bank statements, proof of income, credit, employment, and personal documentation.

When: Usually done right after a green light on a pre-qualification, the next step, some lenders may skip pre-qualification and go straight to pre-approval.

Cost: Varies (but usually a cost is involved for application)

Where: Online or over the phone (depending on entity)

Why: It’s more sound than a pre-qualification because approvals are based on proof of financial status and often evaluated by an underwriter. Can usually provide info about mortgage types and possible interest rates.

What you’ll typically need to provide:

  • W-2 from last 2 years (proof of income)
  • Bank statements (assets)
  • Credit score
  • Pay stubs (proof of employment)
  • Driver’s license
  • Social Security # (personal documentation)


Check Out This Roadmap!