Annual Escrow Breakdown: What You Really Need to Know
As fall rolls in, it’s also time for county property tax bills to become due. If you’re escrowing, your mortgage servicer will handle the tax payment directly to the county.
Around this time, your mortgage company will also review any changes in your tax and insurance costs (for example, if your property taxes or insurance premiums have increased) to ensure there’s enough in your escrow account to cover these payments. Once they’ve completed the review, they’ll send you an Escrow Analysis Statement. By law, lenders must send this within 30 days of completing the analysis, which provides a breakdown of your escrow activity over the past year and projections for the upcoming year.
Your escrow account needs to maintain a minimum balance to cover your tax and insurance liabilities. If your taxes or insurance costs were lower than expected, you may find a surplus. If the surplus is more than $50, your lender will typically send a check along with your statement (nice surprise, right? 
).
On the flip side, if your account is short, your monthly payment will likely be adjusted. A shortage happens when your escrow account balance dips below the required minimum at its lowest point for the next 12 months. Most lenders will let you spread the shortage over your payments for the next year.
Keep an eye out for your Annual Escrow Analysis Statement and be sure to review it closely—you might find a check enclosed or need to adjust your auto-pay amount!
As always, feel free to call or email me if you have any questions about your escrow account.
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Blog post date: Monday, September 9, 2024
