Transcript: Video - Escrow Part 3: What is an escrow review?
Have you ever gotten an escrow statement and wondered why your payment changed? I'll help you learn about your escrow review and the statement we send you after.
Property taxes and insurance premiums for your home can change each year. That's why we review your escrow account at least once a year. We want to make sure there's enough to cover the bills when they're due.
There are two things we look for during your review.
First, we look for a change to the property taxes and insurance premiums for your home. Let's say they're estimated to go up by a total of $600 this year. Since that's the yearly increase, we divide by 12 to get your monthly increase, which is $50.
Remember, part of your total monthly payment goes toward your mortgage to pay your principal and interest, and the other part goes into your escrow account to pay your property taxes and insurance. Since the escrow part is going up by $50 a month, you'll see that reflected in your total monthly payment. That new amount will be on your escrow statement.
The second thing we look for is a shortage or an overage in your escrow account. Your account needs to have a certain amount in it at all times; it's called your required minimum balance. During your review, we figure out how much will be in your account each month for the next year.
If the money in your account is expected to be less than the minimum you need to have, you have a shortage.
There are two ways you can make up that shortage. You can pay the entire amount at once. There's no fee to do this. Or you can spread it out over 12 months. If you want to spread it out, there's no fee but your monthly payment will go up because we'll add part of the shortage to each payment.
On the flip side, if the money in your escrow account is expected to be more than your required minimum balance, you have an overage. That amount will be refunded to you.
That's it! If you have any questions, we're here for you. Check out our other videos to learn more about your mortgage or give us a call at 1-800-357-6675.