digest
Short Summary
Main recommendation: Understand that your escrow account pays your property taxes and homeowners insurance on your behalf, and that your total monthly mortgage payment changes when those costs change, typically reviewed once a year. The video explains how the loan servicer analyzes the account, what happens with a shortage or surplus, and where to check the details.
Key Points
- Your mortgage payment has four parts: principal (paying down the loan balance), interest (the cost of borrowing), taxes, and insurance; principal and interest stay fixed, while taxes and insurance can change yearly.
- The tax and insurance portions go into an escrow account, a reserve the servicer uses to pay those bills for you, which spreads costs into smaller amounts, prevents late payments, and removes the need to track separate due dates.
- Each year the servicer reviews insurer and taxing-authority information to confirm the escrow will cover the next 12 months.
- If costs rise, the escrow can fall below its minimum balance (equal to two months of escrow payments), creating a shortage.
Details Worth Noting
- Concrete instructions: If you have a shortage, choose between paying the full shortage amount as a one-time payment or letting it be spread over the next twelve months, which raises your monthly payment. To check your escrow, log in to Borrower Connection at homeloanserve.com, click the escrow analysis link on the My Loans page, and review the amount of any shortage or your new payment there. You will also receive a mailed copy of the escrow review.
- A surplus over $50 (with the loan not delinquent) is refunded; a surplus of less than $50 is credited to the escrow account, lowering your payment for the next twelve months.
- You will be notified at least 30 days before any payment change.
Bottom Line
Your escrow-driven payment is reviewed annually, so expect possible changes and plan for either a lump-sum shortage payment or a higher monthly amount when the review arrives.
