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 those bills are due, we use the funds in your escrow account to pay them.
Yearly escrow review
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. It's calculated to not be more than 2 months of escrow payments.
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.
• Above the minimum balance, you’ll have an overage.
If the money in your escrow account is projected to be below your minimum balance at its lowest point in the 12-month period, you 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 in full. Send a check for the full amount and we’ll put it in your escrow account.
• Pay it over 12 months. We’ll add a portion to your monthly payment.
If your escrow account is projected to have more than the minimum balance required at its lowest point in the 12-month period, you 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. In most cases, we’ll send you a refund check for that amount.
We’ll send you a statement after each review to let you know of any changes to your account.
For information on your specific property taxes or insurance costs, contact your local property tax office or your insurance company
Built a new home?
Property taxes are based on land value at first. They go up when your home’s value is taxed too. To plan, put extra money towards escrow early on. Call us at 1-800-844-2400 to find out more about this process.