In short, escrow is an account you make payments to each month that is managed by your mortgage servicer and used to make payments on your property and school taxes and homeowners insurance. Your escrow account is separate from your mortgage, but payments are typically collected in equal amounts each month as part of your overall mortgage payment. Though escrow accounts are common, you may find yourself asking a lot of questions about them. To help gain a better understanding of what to expect, here are some answered questions about escrow.
What are the Benefits?
How is My Escrow Calculated?
What is an Escrow Cushion?
What does an Escrow Analysis Do?
Why Did My Escrow Payment Increase?
The most common reason for an increase in your payment is due to the increase of property and/or school taxes. As taxes go up, your escrow payment will go up. Homeowner’s insurance fees can rise as well, but typically the increase is minimal. Keep in mind, your escrow payment can decrease as well. This usually is because your property value went down, resulting in a lower tax assessment and lower escrow payment.
You can consult your local tax authorities to review your taxable amount and discuss any inconsistencies. Find out if you qualify for exemptions.