Some of the more common questions we get here at Quicken Loans involve escrow. Even the name is confusing. What the heck does it mean?
When it comes to your mortgage, your escrow account is a fund set aside to pay your property taxes and homeowners insurance. Every cent in your account goes toward making these payments. The goal of your escrow account is to make life more manageable by spreading out the cost of taxes and insurance over the course of the year rather than paying in one lump sum.
Things get interesting, though, when your tax and insurance payments change. You can end up with either a shortage or an overage in your account. If you’re not expecting it, it can come as quite a surprise.
We like surprises, but they’re usually better when they involve birthday cake. When it comes to your escrow account, it’s better to keep things steady. One way we try to help you avoid the unexpected is to give you as much information as possible.
With that in mind, we’ve created some new pages on Rocket Mortgage to help simplify your escrow account for you.
Escrow Information Page
The first thing we want to highlight is a new general escrow information page that’s available to our clients. This page will show you not only the payments we’re taking out of your account for both your taxes and insurance but also the payments we expect to make over the course of the year.
The goal of this page is to give you more insight so that if you see a change in your taxes or insurance that you’re not expecting, you can proactively contact your insurance carrier or taxing authority.
This page will also show you the date of your next escrow analysis. We’ll get into that a bit more below.
Tax and Insurance Payment History
It’s great to know what you’re currently paying, but how are your tax and insurance payments trending? Wouldn’t it be great to have an idea of what you could expect to pay in the future? That’s the idea behind our tax and insurance payment history page.
The first part of this page gives you an idea of what’s been paid out of your account, who the payment was sent to and when it was made.
From your past history, we’re able to give you a look at the trend in your tax and insurance payments. This can help give you some idea of what you could expect to pay in the future.
There are a couple of other pages we want to go over. You’ll see these at least once a year when your escrow account is analyzed. During an escrow analysis, if your property taxes or insurance have gone up, you’ll have a shortage in your escrow account. If your taxes have gone down or your homeowners insurance policy has become less expensive, you would instead have an overage.
Let’s touch on the shortage page first. Did you switch to a homeowners insurance policy with different coverage and a higher payment in the past year? Property values have generally been on the rise nationwide. While this is a good thing, it may give your house a higher taxable value.
If you have a shortage, you have a couple of options. You can make a one-time payment of the entire amount. You can make this payment online through Rocket Mortgage or by contacting our Client Relations team at (800) 863-4332. Finally, you can make an escrow-only payment by mailing in a check along with the coupon attached to your escrow analysis statement.
But if paying the shortage all at once doesn’t make sense for you, you can spread it out over 12 months.
An escrow analysis doesn’t always have to bring bad news. You could actually have an overage. If this is the case, we’ll send you a check for the difference between the amount in your escrow account and the amount paid out for your taxes and insurance.
When might an overage come into play? Let’s say you applied for and were granted a property tax exemption. This would likely mean you would have to pay less than what was actually being set aside as part of your mortgage payment. If that’s the case, you’ll be receiving a check the next time your escrow account is analyzed.
We could talk all day, but wouldn’t you rather check out the new escrow pages yourself? Go see your escrow information. Do you have pressing escrow questions? Share them with us in the comments.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.