Escrow Answer Guide

As your mortgage loan provider, we collect funds and hold them in an escrow account to pay required items on your behalf, like property taxes and property insurance(s). We also escrow for flood insurance, and it is mandatory if in a flood zone. This ensures adequate funds are available when these items are due. 

At least once each year on July 1st, we perform a review of your escrow account to make sure the funds in your account will be enough to pay these required items in the coming year. We provide you with the results in an “escrow analysis statement.”

• Any changes to your monthly payment amount.
• Actual payments from your account in the last 12 months.
• Projected payments from your account in the next 12 months.
• The amount of any shortage or surplus in your required minimum monthly escrow account balance.

This is the most common question customers have when they receive their escrow analysis statement. The most common reasons your escrow payment could change are: 

• Fluctuations in your property tax bills, including changes to tax rates or assessed property value, as determined by your local taxing authority.
• Changes in your homeowners or other insurance, including changes to your premium due date.

If you prefer not to have the total shortage divided into 12 equal payments and added to your monthly mortgage payment, you may contact our Real Estate Team to discuss other payment options. However, if your taxes and/or insurance have increased from the previous escrow cycle, your payment may still go up even if you pay the entire shortage. The escrow analysis statement will also give information about the shortage. 

If your escrow analysis identifies a surplus of more than $50, it is refunded to you. If the surplus is less than $50, it will be used to reduce the future mortgage payment.

Most likely, yes. This is because your taxes were based on “unimproved land,” meaning your taxes were determined by the value of the land your home was built on without a building or facilities. 

Now that your home is finished, the taxing authority will reassess property values following a new build and periodically every couple of years for everyone else.  For construction, reassessments happen in January through March of the year following completion. This will most likely increase the tax amount significantly.  An escrow shortage may occur if the taxes being collected are not based on the estimated real estate property tax, so make sure you keep an eye on your escrow account. 

Keep in mind that an escrow cushion or required reserve equal to two monthly escrow deposits (this could also include flood insurance) may be required to cover unanticipated disbursements or disbursements made before your escrow funds are available in the account. 

Your escrow account may be eligible for removal once certain requirements are met. Please contact us for escrow removal requirements. 

You can call us at (800)-600-7117 or reach us through our Contact Us portal.