Staying Informed About Your Escrow Account

Staying informed about your escrow account with an annual analysis is part of being a successful homeowner.  There are many new homeowners in the real estate market this year due to the $8,000 first-time tax credit and many of them are new to the whole escrow account concept.  Therefore, I want to take the opportunity to blog about how homeowners can stay informed about their escrow account with an annual analysis so they will know exactly how it works.

For those who don't already know, an escrow account is an account that is usually set up with your mortgage company at closing to enable you to pay your real estate taxes, homeowner's insurance premiums and other applicable insurance needs such as flood insurance or mortgage insurance.

Each month, you will add to your escrow account when you pay your monthly mortgage.  When you receive your mortgage statement, you will see that part of your payment is being applied to your principal, interest and escrow.  You will also be able to see how much your escrow account is accumulating.  This amount will change after your mortgage company makes a payment for your real estate taxes or insurance needs on your behalf.

Each year, your mortgage company will do an analysis on your account.  This analysis will show if you have enough in your escrow account to meet the annual requirements for next year's taxes and insurance needs.  This analysis will also determine if your payments need to be adjusted up or down.

Your annual analysis will allow your mortgage company to give your escrow account a fine tuning.  If there is an overage, you will get a refund.  In this case, you can keep it or you can apply it back to your loan into the principal.  If there is a shortage, your payments will then be adjusted to make up for the difference.  How much more you will pay will depend on the shortage amount of your loan.

Having an escrow account really simplifies everything.  You just have to make your monthly payment and your mortgage company will take care of the rest.

Realtor ~ Lake Havasu City, Arizona Real Estate

Committed To And Passionate About Her Profession