What Is an Escrow Account?
An escrow—or impound—account is where funds are held to pay property tax and insurance bills on your behalf. If your loan is escrowed, a part of your mortgage payment goes into your escrow account every month.
Then we use the money to make your property tax and insurance payments for you. You never need to worry about whether you’re saving enough or when a payment is due—we’ll manage this for you.
Note: Your escrow balance cannot be used to pay amounts owed, such as payments, fees, or corporate advances.
Why Do I Have an Escrow Account?
Some homeowners choose to use escrow to simplify keeping current with taxes and insurance. Many escrow accounts are a required part of a loan agreement and stated in the loan documentation.
In either case, we open the account at closing or shortly after.
If your loan was transferred to us, and you had an escrow account with your previous servicer, your escrow account was transferred as well.
Feel free to contact us any time with questions about your escrow account.
What’s a Minimum Required Balance?
It’s the lowest balance allowed in your escrow account at any given time—also known as a cushion requirement. This helps us minimize the impact to your monthly mortgage payment when property tax and insurance rates increase.
How Much Is the Minimum Required Balance?
In accordance with state and federal law, we may require your escrow account to contain at least 2x your monthly escrow contribution at all times, not including mortgage insurance.
For example, if you’re currently required to put $500/month into escrow, your minimum required balance could be $1,000.