Escrow accounts are an easy way to manage the payment of your property taxes and insurance premiums for your home. You don’t have to save for them separately because your property taxes and insurance premiums are included in your monthly payment.
When these bills are due, we use the funds in your escrow account to pay them.
Don’t worry about sending us your tax or insurance bills – we typically receive a copy from your local property tax office and insurance companies. If we need a copy, we’ll let you know.
When you close on your mortgage, your escrow account is set up, and we perform (3) calculations:
How do we get those amounts?
First, we estimate the amount over the next 12 months that you will owe for your property taxes, homeowners insurance and other expenses you have in connection with your mortgage, such as; private mortgage insurance and flood insurance. We get these amounts from your loan closing documents, local property tax office, and insurance companies.
Then, we add 1/12th of this annual amount to the mortgage portion of your payment, so you have one combined monthly payment of principal, interest, taxes and insurance.
Next, to help you plan for potential increases, we calculate your minimum required escrow balance. A minimum balance must be maintained in your account at all times, as allowed by RESPA (Real Estate Settlement Procedures Act) regulations. This amount can be up to two months of escrow payments. Did you know that even if you have a fixed rate mortgage, your total payment can change from year to year? This is because property tax amounts and insurance premiums for your home can, and often do, change year after year.
Tax and insurance premiums change over time. We are required to review your escrow account each year to make sure you’ll have enough to cover your tax and insurance bills.
Standard Mortgage will review your insurance and tax projections (and Mortgage Insurance if applicable) for the upcoming year. Once we know the combined annual payment for all escrows (typically all insurance premiums and property taxes), we divide that number by 12 to calculate your new monthly escrow payment. Your new monthly payment is compared to the escrow amount you currently pay. If the new payment is higher than your current payment two things will happen (this increase could be related to an increase in your insurance premium or property tax). First, we will need to increase your monthly payment to match the required escrow per your analysis. Second, we will need to collect the current shortage; that is the amount your escrow account has fallen behind. Typically, we allow borrowers 12 months to pay their shortage, if necessary. For example, if a borrower’s shortage is $1,200, their payment will increase an additional $100 per month until the shortage is paid. The payment will then automatically return to the new amount calculated to meet your escrow requirements. The opposite is true for a surplus. However, instead of us collecting money over 12 months, we send you a check for the surplus amount. You will receive a copy of your escrow account review/analysis and it will determine if your payment will remain the same, increase, or decrease for the upcoming year.
Your projected low point may or may not have been reached based on one or more of the following factors:
While an escrow account and its payment allocations may seem like an added expense, it is a necessary part of your mortgage and is required by certain loan investors. It also comes with some benefits. Instead of having a large property tax bill at the end of the year that must be paid at once, it is divided into 12 smaller amounts. Furthermore, you don’t have to actually make the payment to your county, parish, or city; your lender will pay it directly from your escrow account. The same is true for any insurance premiums. With your escrow account, you can be confident that your property taxes and insurance premiums will be paid on time.
Property taxes and insurance are an essential part of homeownership and your mortgage. Your lender will help you to understand how escrow works and how it will affect your monthly payment. For over 90 years the expert staff of loan officers at Standard Mortgage have been helping people find the right solutions for their mortgage needs.
Your yearly Escrow Account Disclosure Statement which is performed during the anniversary month of your loan, can be accessed online, from our website. Please click here to view or register for access using eStatus Connect. Your statement can be found under Statements/Documents/T&I Disclosure. An email notification will let you know when your new statement is available for review.
Your coupon book also contains your Escrow Account Disclosure Statement with detailed accounting of your escrow since the last review (past 12 months) and if you have a shortage, deficiency, or a surplus, which could be refunded to you.
If you have any questions concerning your annual escrow statement, please contact Customer Service at (800) 448-4190, Monday through Friday, 8 am to 4:45 pm, CST or by email to firstname.lastname@example.org.