Escrow Analysis Explained

Escrow Analysis Explained

Every year your mortgage company performs something called an escrow analysis.

Many homeowners throw the letter away without reading it, only to notice that their monthly payment has changed.

Understanding this annual review can help you avoid surprises.

What Is an Escrow Analysis?

Your lender compares:

• The amount collected in your escrow account
• The actual property tax bill
• Your homeowners insurance premium
• Any required minimum escrow balance

If there wasn't enough money to cover those expenses, the lender creates an escrow shortage and adjusts your monthly payment for the coming year.

Can Payments Go Down?

Yes.

If your taxes decrease or your insurance premium drops, your monthly payment may also decrease. Some homeowners even receive an escrow refund when too much money was collected.

What Should You Review?

When your escrow statement arrives, verify:

• Your insurance premium
• Your property tax amount
• Any escrow shortage
• The new monthly payment

Mistakes are uncommon, but reviewing the statement helps ensure everything is accurate.

Questions about your escrow statement? Reach out and I'll help you understand what changed and why.