Want to know the basics about escrow?  You’ve come to the right place. 

What is escrow? An escrow account is money set aside from your monthly mortgage payment to pay expenses related to property taxes and insurance premiums like homeowners, flood or private mortgage insurance (PMI). Your monthly mortgage payment amount is broken down into  two parts:

• One part goes towards mortgage principal and interest.
• The other part goes into your escrow account to pay property taxes and insurance premiums like homeowner’s insurance, mortgage insurance or flood insurance.

When taxes and insurance payments are due, we use money from the escrow account to pay the bills.

How does it work?  Let’s break it down.  Here’s what we do:   

1. Project your annual property tax and insurance amounts and divide them by 12 months.
2. Add that to your monthly mortgage principal and interest amount. 
3. Take your monthly mortgage payment and deposit the tax and insurance money into your escrow account. 
4. Pay your tax and insurance bills for you. 
5. Review your escrow account every year, and send you a statement, to make sure you’re covered for any cost changes. 

How do you know how much tax and insurance to pay? We get a copy of your bill(s) from your local property tax office and insurance company(s), so we know when and how much to pay. 

Why do I have to have an escrow account?  Typically, escrow accounts are required if the down payment on your home was less than 20%.  There are benefits to having an escrow account even if it’s not required.  With escrow, we manage the savings of and make the payments for your property taxes and insurance premiums, so you don’t have to.