How is my monthly escrow amount determined?
Escrow payments are typically determined in the following manner:
1. Estimate your real estate tax and homeowners insurance bills amount for the next 12 months for. The estimate is based on information from your loan closing documents, your taxing authority and insurance company, or your previous tax and insurance bills.
2. Divide the estimated amount by 12 and add the result to your monthly payment.
3. Determine whether any adjustments, such as shortage payments, are necessary to keep your escrow account in balance.
Escrow analysis will be done annually and your mortgage payment may change due to the calculation. For example if taxes are increase in your municipality, this will result in an increased monthly payment so that the lender will have the funds to pay the taxes.
Why does my account require a minimum balance, and how do you determine the amount?
A minimum balance helps ensure that if taxes or insurance premiums increase, your account can cover them without ending up with a large shortage. Minimum balance requirements are governed by federal law, or by your loan contract and applicable state law. The minimum balance is equal to two months of escrow payments (not including mortgage insurance), unless state law or your loan contract requires a lesser amount.
Do I need to send my lender my real estate tax bill each time it’s due?
Real estate tax information is usually directly received from the taxing authority.
Does my escrow account earn interest?
No interest is earned on the funds in your account.
Call Conquest Real Estate to Learn More (248) 569-1486
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