Your escrow analysis statement is a written notification of a hike or drop in your monthly mortgage payment before it happens. The statement shows you what's going on with your escrow items, such as your homeowners insurance and property taxes, over the next year. If your costs are expected to go up, the escrow part of your mortgage payment goes up to cover the increase, raising your overall payment. Before you sound the alarm, read over your analysis to make sure it's right.
Find your new payment. Both your old and new payment should appear on the first page or in a highlighted spot. The payment breakdown is for your current and new monthly payments, with individual amounts shown for your principal and interest and your escrow.
Go to the projection section. This part lists the escrow items for the upcoming year. The lender shows escrow item estimates, which determine whether your escrow goes up, down or stays the same. For each escrow item line, you'll see how much the lender expects to pay and when. You can also see how much the lender believes will be in your escrow account after payments are made each month.
Review the escrow balances in the projection section. This section tells you how much the lender estimates you'll have in your escrow account each time an item is paid and at the end of the month. Usually, the escrow balance is shown to the far right of each item line.
Go over the escrow activity from the previous year. This section is set up like the projection section but shows what actually went on with your escrow last year. You'll see who was paid, how much they got and how much money you had in your escrow account each month.
Make sure the escrow projection figures are right. While the lender can adjust for expected increases, you shouldn't see major hikes unless something drastic has happened. For example, the lender shouldn't expect your property taxes to go up by 20 percent unless area property values spiked significantly over the last year. Talk to your lender if you find an unexplainable difference.
Confirm all your escrow items are shown on the projection. Use the previous year history for reference. If you're missing something, your escrow will be short, and you might be stuck paying the difference all at once or have a sudden payment hike to cover the shortfall. If you think an item is missing or there is a bill listed that shouldn't be there, call your lender.
Check for a payment coupon if your projection section shows a shortage and your payment is going up. If you pay the difference, you can keep your monthly payment at the same amount.
- Your lender might pay you interest on your escrow but isn't required to do so.
- Lenders can require you to keep a cushion amount in your escrow account under federal law. The escrow balance can't go under the cushion, which is typically two months' worth of escrow payments, during the year.
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