Owning a home should perhaps be simple, but in reality, involves a lot of details. Dealing with the mortgage escrow account -- money that is set aside by your lender to cover property taxes and insurance -- is one of those details. Typically, escrow monies are deducted from your mortgage payment each month and deposited into the account. However, tax and insurance rates can fall or rise during a period of property ownership. If the amounts that are paid from escrow drop and the bank does not adjust the monthly escrow deduction, you can end up with an overage.
Get the current property tax amount. Your local taxing authorities -- city, county and school district -- are the sources for this information. If you cannot find a recent bill, phone each of the authorities to get the current figure.
Find out how much the insurance company is charging by locating your declarations page. Otherwise, you can contact the insurer by phone or visit an office in person, if possible, for the data.
Add together the yearly amounts for taxes and insurance. Divide the yearly amount by 12.
Check into the balance of your escrow account. You should find this information in the escrow statement portion of your mortgage statement, whether in print or online. If you cannot locate the data, phone the bank to get it.
Deduct the taxes-plus-insurance yearly amount from the escrow balance. A positive result represents the amount of the overage.
- By federal law, mortgage lenders are required to refund any overage greater than $50.00 within 30 days of its discovery. An escrow overage is typically discovered by the lender during what is termed an escrow analysis.
- Keep an eye on your escrow balance and on the property tax and insurance amounts. Banks sometimes fail to make the required payments from the account. If you regularly conduct your own escrow analysis, you may save yourself the hassles of attempting to rectify deficient or missed payments.