Mortgage Loan Escrows Frequently Asked Questions (FAQs)
Find out more about Mortgage Loan Escrows, how they work, payments, and other helpful information!
- What is an escrow account?
An escrow account is when you, as the borrower, make monthly mortgage payments that include the anticipated annual amount needed to pay taxes and insurance premiums. These funds are placed in an escrow account until the lender and/or service provider pays the taxes and insurance as they come due.
- Your lender pays your real estate taxes. Why do I still get a bill?
Counties do not send tax bills to mortgage companies. These are always sent to the homeowner. The lender and/or service provider uses a 3rd party to track amounts due so these can be paid. When you receive your tax bill you should review this and file it for your records.
- When is an escrow analysis performed?
This is performed annually in April. The results are then mailed to you. If there are any changes to your payment it will begin with the June 1st payment due date.
- What are the most common reasons for my escrow payment to change?
Changes are typically due to an increase and/or decrease in real estate taxes and/or insurance premiums. Increases will likely increase your monthly payment and a decrease will likely decrease your payment.
- What is an escrow overage?
This will happen when your escrow analysis shows you have more reserves in the escrow account than the required minimum balance. If an overage is discovered during the analysis, the difference will then be refunded to you.
- What is an escrow shortage?
This will happen when the escrow analysis shows that there is not enough money in the account to meet the required minimum balance. After the analysis, the monthly payment will be adjusted to make up the shortage in up to 12 months, or you may cover the shortage by making a one-time payment. The one-time payment must be received within the middle part of the month prior to the change. This can be done by mailing a check or contacting the service provider to allow a one time ACH payment from your account. This will allow the payment to adjust correctly for the June 1st payment.
- What is a required minimum balance?
The required minimum balance is the smallest amount of money you can have in your escrow account at any time during the year. The required minimum balance (also called a cushion) may include up to two months of escrow payments minus mortgage insurance (if applicable) to cover potential increases to your taxes and insurance premium.
- Who should I contact with any questions on my escrow?
You can contact your service provider with any questions and/or a Zing Mortgage Loan Representative.
- What happens if my loan is not escrowed for taxes and insurance?
It will be your responsibility to pay your real estate taxes and insurance. If these are not paid, lenders reserve the right to pay the outstanding installment and an escrow account will be established on your loan. The actions may cause an increase in your total mortgage payment amount.