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Making Escrow Simpler Through MyQL - Quicken Loans Zing Blog

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, homeowners insurance and mortgage insurance (if applicable). 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 taxes and insurance premiums change. Because these fluctuate, your payment can change even if you have a fixed-rate mortgage. You can also end up with either a shortage or an overage in your account.

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 because changes can be tough on your budget. One way we try to help you avoid the unexpected is to give you as much information as possible. You can use the Rocket Account servicing portal to see ongoing trends in your escrow account.

We’re obsessed with finding a better way and have made changes to our escrow analysis statement in response to your feedback. We hear you loud and clear! Before you get your statement, though, let’s get you prepared with some escrow basics.

What’s Included In Your Escrow Account?

As noted above, the purpose of an escrow account is to help you budget by not having to make lump sum payments for certain recurring expenses related to your home. Your escrow account may include the following:

Property Taxes: These are the local and state real estate taxes that have to be paid on a periodic basis to your local taxing authority such as your county, city or school district.

Homeowners Insurance: This covers the cost of rebuilding or replacing your home in the event of damage. It also often includes liability coverage should an accident happen on your property. Finally, personal belongings may be covered in the event of theft up to a certain amount. This is typically an annual premium.

Mortgage Insurance: If you have less than 20% equity in a conventional loan or have an FHA or USDA loan, a monthly mortgage insurance payment (or guarantee fee for USDA) is often required. If this is the case for you, you make a monthly payment into your escrow account and your lender pays the premium.

Each individual escrow item above is divided by 12 and rounded to the nearest cent. The items are then added together to get your new monthly payment amount.

Perks Of Having An Escrow Account

The biggest benefit of having an escrow account is that these items, which would represent a significant lump sum expense if you didn’t have an account, are instead split up into 12 more manageable monthly installments.

We take care of the management of the account for you so that you never have to worry about it. You’ll always know that your taxes and insurance are paid on time.

Understanding An Escrow Analysis

At least once every year, Quicken Loans performs a review of your escrow account to ensure there are sufficient funds in your account to cover your taxes and insurance.

At that time, if there are any changes to your escrow account, we’ll let you know. The following sections will go over the timing of your analysis and possible outcomes.

When Will I Get My Escrow Analysis?

The review of your escrow account will normally depend on what state you live in. The chart below will go over when the review of your escrow account is conducted in your area as well as when you can expect to see any changes reflected in your monthly payment.

Escrow Analysis State Schedule with color-coded map of the USA and chart of state escrow organized by state and by month.

Escrow Analysis Outcomes

There are three possible outcomes to an escrow analysis.

Payment stays the same: If nothing changes about your taxes and homeowners insurance, things should continue as they were before and you should expect no changes for the next year.

Payment decreases: This is typically the result of your taxes and/or insurance premiums decreasing.   If there are excess fund in the account, these are returned to you. This is sometimes referred to as an escrow overage.

Payment increases: If your property taxes or homeowners insurance have gone up in the past year, you may have a shortage in your escrow account. If you end up with a shortage, you’ll have to pay off the difference. You have a couple of options.

What Happens When There’s An Escrow Shortage?

When you have an escrow shortage, there are a couple of options that you have.

One-time payment: If you elect to do so, you can make a one-time payment toward your escrow in order to make up for any shortage. Even if you pay the shortage in full, your escrow payment may still change. Why? Most likely because your tax and or insurance have increased so the 1/12 of your escrowed item is still higher. Unfortunately, we can not ask you to pay more into your escrow account to keep your payment the same. There are several ways to pay your shortage. These include the Rocket Mortgage by Quicken Loans website or the Rocket Mortgage app. Other payment options will be available on your escrow analysis statement.

Pay over the next year: If making a lump sum payment doesn’t make sense for you, you have the option of having the shortage amount added to your escrow payment in equal monthly installments over the next year. If you take no action, this will automatically be how your shortage is handled.

How Is The Minimum Escrow Account Balance Calculated?

One of the things we talked about above is the fact that there’s a minimum escrow account balance. This is intended to prevent you from ever having an escrow deficiency by having up to 2 months’ worth of tax and insurance payments in your account based on the amounts shown in your most recent review. This would cover potential increases in your tax and insurance payment.

The minimum required escrow balance is determined in accordance with the Real Estate Settlement Procedures Act (RESPA), your mortgage contract or state law, but up to 2 months’ worth of cushion could be required.

How Is My Payment Calculated?

Your payment includes principal and interest. This escrow payment for the next year is also included, with applicable monthly amounts for property taxes, homeowners and mortgage insurance.

Keeping Track Of Your Escrow

We have a couple of features on your Rocket Account that are intended to help you keep track of your escrow information and be better prepared in the future. Let’s briefly run through these.

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/or 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.

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.

That’s everything you need to know about an escrow analysis. It’s a complicated topic, so if you still have questions, let us know in the comments below. If you would like to view your current escrow analysis statement or other pertinent mortgage documents, you can do so online in the Rocket Mortgage documents section.

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This Post Has 34 Comments

  1. Why was Roswell City Tax paid twice in November 2019 (11/07 and 11/27)?
    One of these is wrong and should be deleted!!!
    The first was probably an initial estimate which was amended to the second which was the final(?).
    Please make this correction!!!

    1. Hi Joy:

      Thanks for reaching out! I’m going to get this to our team. Someone will reach out after we’ve had time to look into this.

  2. Hi I am a 65 year old woman. And I was granted the Homestead Act for 2020 I live in Ellijay Georgia and I had to have been 65 by January 1st and have all my paperwork in by March. I had all my paperwork in before the due date but my birthday was in May so I had to wait until 2020 to get it. Here it is almost February and still nothing has been done I picked up a letter from the tax Assessor’s Office saying that I was approved. I should not have to pay school taxes for 2020. How do I get this taken care of because that is a very large deduction out of my taxes. And would absolutely change my mortgage payment. Is there anything that can be done.

    1. Hi Sandra:

      I’m going to get this to our team. Assuming you’re a Quicken Loans client, we may be able to redo your escrow analysis if you have the letter from the tax assessor. Someone will reach out. Thanks!

  3. I’m having the same problem Isabela highlights earlier in the comments. Quicken’s escrow analysis for my mortgage is horribly wrong! I had a return of over $3400 on my 6 months escrow analysis this December. Despite the overage Quicken is choosing to increase the withholding for my escrow! I have called in to support twice to have this rectified to no avail. I am giving Quicken an interest free loan to the tune of $7000/year on my home loan. This is ludicrous. Is there a way to opt out of the escrow process all together and pay my home insurance and property taxes on my own so I’m not being penalized and overcharged for escrow?

    1. Hi Mark:

      I’m going to get this to our team to address your concerns. With that being said, it’s possible to have an overage and still have your taxes and insurance go up because the new number is meant to reflect your current taxes and insurance payments for the upcoming year as opposed to payments made in the past.

      1. That’s not the case in every instance, but in many cases that is true. Yes. Of course, having an escrow account can help simplify your budgeting.

  4. Why does the escrow analysis say that there is a shortage when I actually have several hundred dollars over the total of my taxes and insurance in escrow? Your escrow analysis is requiring me to pay a monthly amount that, multiplied by 12, equals about $700 more than the total of homeowner’s insurance, property taxes and mortgage insurance. Is it customary for escrow to require such a surplus?

    1. Hi Isabel:

      Thank you for reaching out. It’s possible that your taxes and insurance have increased, leading to the shortage. I have contacted out Client Relations Team to examine the matter. They will reach out to you soon to discuss the specifics of your account.

    1. Hi David:

      I’m going to get this to our client relations team to look into this for you and see what we might be able to tell you if you’re a Quicken Loans client. In any case, no matter what servicer you deal with, you should receive the check by the time your new escrow goes into effect. I hope this helps!

    1. Hi Gary:

      You should get a notice from us either electronically or in the mail depending on your preferences that will give you options as to how to pay off your shortage, assuming that’s what you’re talking about. At that time, you’ll be able to make the lump sum payment.

  5. I think the information given here is great! I know many 1st time home buyers that have questions about this. I unfortunately had to learn the hard way with another company. You guys are great for trying to make it easier to understand and avoid any unwanted surprises for your customers.

  6. I am between a rock and a hard place, and definitely need advise. My son was given my car that I purchased for cash, a few years ago, and the car was 10 years old, but very seldom did I drive it. My son was really in a pickle over his financial condition, and that is when I signed the car over to him, and I was left with nothing. I leased for three horrible years, and at the end of that three years, My son said instead of using more money to lease another one, why not if we just share this one. That sounded wonderful, as we lived in buildings next to each other. He informed me there was something wrong with the car, he had quotes, and was there any way for us to maybe share the the cost? I was disappointed, but not surprised. I used a credit card from band of America, and only owed 17 or 18 hundred, I cannot quite remember the total , but I was unable to come up with the payments. I need the money to pay the principal off, and then add their money onto assets I have, and was hoping the house mortgage payments could become low enough to help me, and I can then make the larger payment to you through the bank Bill Payment deal as I make your payments now. Please help me. I am not physically able to go out and get a job to go with the retirement I have coming in, I am 78, and feel ok, but I need your help for me and my re financing my home. Please advise me on what to do and how do I do it.?? This is very personal.

    1. Hi Lois:

      I’m going to recommend you speak with one of our Home Loan Experts at (888) 980-6716. They would be able to go over any options you have in detail. If for some reason refinancing isn’t an option, if you’re a currently serviced client, I recommend speaking with our servicing team at (800) 508-0944 and we can go over your situation to see if there’s any way we can help you out and get you on a path to stability. Thanks for reaching out!

  7. So, let’s say my taxes and insurance go up, my escrow amount withheld each month is enough to cover and have an overage, and your calculation says my amount should be higher, only because you refunded me the overage. Why not give us the option to leave the overage and keep the escrow payment amount the same or even less? In other words give us the option. I am sure the law must have some flexibility. Do you?

    1. Hi John:

      Unfortunately, when it comes to your escrow account, we have to follow the policies of the major mortgage investors we work with (Fannie Mae, Freddie Mac, FHA, etc.). With that said, one thing you can do is take that overage check when you get it and deposit it back into your escrow account either online or with the option on your payment coupon for an escrow-only payment. This would help prevent a future shortage. What we cannot do is keep your escrow payment the same even if you have extra funds in your account after your taxes and insurance go up. Mortgage investors want you charged what you would actually pay for taxes and insurance because it’s a risk mitigation policy. I hope this helps explain things!

  8. The insurance that you proposed for us to buy, is cheaper than the one we got…. can we still have your insurance?….American Security Insurance Company…

  9. Thanks! All these words did nothing to justify the poorly managed incident caused by Quicken and left to me to correct! I am now responsible to the township for $1.000.00 more for school tax that because of my age and income I would have been exempt.

    1. Hi Joseph:

      We would love to look into the specifics of your situation and see if there’s any way we can assist. I’m sorry you’ve had problems with your escrow account and I’m going to have someone reach out!

  10. If I have an overage one year and you send me a check, can I request that it be returned to my escrow account? The change period where is live is November/January, and I’ve had it happen that I’ve needed to come up with a few hundred dollars which is not at all easy during the holiday season.

    1. Hi Joanne:

      You definitely have the option to put the overage check back in your escrow account. What you can do is deposit the check into your bank account and then make a one-time payment through your Rocket Account. You can specifically request that the payment be applied to your escrow account. I hope this helps! Have a great day!

  11. I have a new/different phone number than the one I had at the time I purchased my home (through Quicken Loan). How can I be sure you have my current (and correct) one?

  12. We changed insurance companies for one of our clients. Their mortgage is with Quicken Loans. How do they put the prior insurance companies refund check back into their escrow account?

    Thank you, Tim

    1. Hi Priscilla:

      If you have an overage in your escrow account, it means you paid more in for taxes and insurance than was actually necessary. Your mortgage servicer will cut you a check. It’s your lucky day!

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