Impound
 |
Definition of 'Impound'An account maintained by mortgage companies to collect amounts such as hazard insurance, property taxes, private mortgage insurance and other required payments from the mortgage holders; these payments are necessary to keep the home but are not technically part of the mortgage. Impound accounts are often required of borrowers who put down less than 20%, but are usually optional in other cases. The purpose of the impound account is to protect the lender. Because low down-payment borrowers are considered high risk, the impound account assures the lender that the borrower will not lose the home because of liens or loss, as the lender pays insurance, taxes, etc. from the impound account when they are due. |
 |
Investopedia explains 'Impound'Though the impound account is designed to protect the lender, it can also help the mortgage holder. By paying for these big-ticket housing expenses gradually throughout the year, the borrower avoids the sticker shock of paying large bills once or twice a year, and is assured that the money to pay those bills will be there when they need it. However, if the mortgage company does not pay these bills when they are due, the borrower will be held responsible, so borrowers should keep an eye out to make sure their mortgage companies are fulfilling their end of the bargain. |
Related Definitions
Articles Of Interest
-
Understanding Your Mortgage
We walk through the steps needed to secure the best loan to finance the purchase of your home. -
Mortgages: Fixed-Rate Versus Adjustable-Rate
Both of these have advantages and disadvantages depending on your financial needs and prospects. -
Mortgages: How Much Can You Afford?
Answering this means number-crunching as well as factoring in other considerations and expenses. -
4 Steps To Attaining A Mortgage
It starts with knowing your choices as well as your price range. We show you how to get there. -
Understanding Mortgage Impound Accounts
Home buyers with low down payments may get stuck with higher mortgage payments. Find out what you get for the extra money. -
Financial Designations That Employers Require
We break down the designations that are important to have if you want to work in the financial sector. -
6 Tax Deductions That Might Get You Audited
Incorrect or liberal interpretations of what you can write off will often lead to the IRS taking closer interest in your filings. Knowing the rules behind these six tax deductions will go a long ... -
Retirement: The One Thing Couples Shouldn't Do Together
Staggering retirement can have both financial and emotional benefits for married couples. -
Top 5 Budgeting Questions Answered
You don't need a degree to understand your money, begin saving and pay down debt. -
Investing In Medical Equipment Companies
Learn the basics about medical equipment companies and how investing in them can benefit growth and value investors alike.
Free Annual Reports
