Understanding Escrow Statements: When and How to Receive Them

When you own a home, it's likely that you have an escrow or seizure account with your mortgage lender. This account is used to pay obligations such as taxes and insurance that the mortgage servicer pays on your behalf. An escrow statement is a document that provides details of the escrow account, including any deficits or surpluses. In this article, we'll discuss when and how to receive an escrow statement. For escrow accounts established after liquidation (and which are not a condition of the loan), the servicing entity must submit an initial escrow statement to the borrower within 45 calendar days from the date of establishment of the escrow account.

Your escrow disclosure statement will provide details of any shortages and any additional information that may be needed. Since the home security deposit is based on taxes and insurance premiums, these costs are likely to increase over time. If your monthly escrow payments can't cover the difference, you may experience an escrow deficit. In this case, the mortgage servicer will automatically adjust the monthly payment accordingly. You will then receive a notice indicating a larger monthly mortgage payment that will remain in effect at least until the next review of the escrow account. When your lender performs your escrow analysis, they will send you a statement, either by mail or in your online account.

If your taxes increase or your property is valued at a higher value than expected, your escrow account may not be able to cover all charges. The lender (or the person who manages the escrow account) should be aware of these changes, but don't assume they will be. Log in to your online mortgage account and select the Security Deposit Details link to see the most recent amounts paid for your property taxes and insurance premiums. When you have an escrow account, your total monthly mortgage payment includes the principal and interest on the loan, in addition to property taxes and home insurance (or risk insurance), and flood insurance if you are also in a flooded area.

Home equity accounts

are generally used to collect and pay property taxes and home insurance payments. Conversely, if you qualify for a property tax reduction or a cheaper home insurance policy, be sure to apply for it and, if things change, be sure to contact the custodian of your escrow account so that payments are accurate.

The lender cannot charge an excessive amount on the escrow account during the life of the loan, and there are limits on the amount the lender can require you to put in the account. Your minimum balance varies by state, but is estimated to not exceed 2 months of escrow payments. When your taxes or insurance are due, the company that administers the loan will withdraw the money from your escrow balance to pay those bills. The lender must perform an analysis of the escrow account once a year and notify you of any deficits or surpluses. In conclusion, it's important to understand when and how to receive an escrow statement. An initial statement should be sent within 45 days of establishing an escrow account.

Your lender will also send you a statement when they perform an analysis of your escrow account once a year. Be sure to log in to your online mortgage account regularly to check for any changes in taxes or insurance premiums that may affect your payments.