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What is escrow?It's an easy way to manage property taxes and insurance premiums for your home. You don't have to save for them separately because you make one monthly payment where:
- Part goes toward your mortgage to pay your principal and interest.
- The other part goes into your escrow account for property taxes and insurance premiums (like homeowners insurance, mortgage insurance, or flood insurance).
When escrowed bills are due, we use the funds in your escrow account to pay them.
Don't worry about sending us your tax or insurance bills - we usually get a copy from your local property tax office and insurance company. If we do need you to send one to us, we’ll let you know.
Escrow Analysis Overview
Tax and insurance premiums change over time. We review your escrow account each year to make sure you'll have enough to cover your bills. To help with any unexpected increases, you need to keep a minimum balance in your account at all times. The minimum balance is calculated to be 2 months'-worth of escrow payments.
We'll send you a statement after each review to let you know of any changes to your account. Your monthly escrow payment will change 2 months after the review/analysis is run.
During your review, we figure out how much will be in your account each month for the next 12 months. At its lowest point, if it's projected to be:
- Below the minimum balance, you'll have a shortage. This can happen if the taxes or insurance premiums for the previous 12 months were more than expected, or if they're estimated to go up in the next 12 months.
You can make up a shortage in 1 of 2 ways:
- Pay it over 12 months. Part of your new monthly payment will include paying the shortage over 12 months.
- Pay it in full. Send a check for the shortage amount and we'll lower your new payment by the shortage amount divided by 12.
- Above the minimum balance, you'll have an overage. This happens if the taxes or insurance premiums for the previous 12 months were less than expected, or if they're estimated to go down in the next 12 months. We will mail you a refund check for any surplus amount over $50. It will be sent in a separate envelope from the review/analysis.