An Escrow Analysis Statement is a document provided by your mortgage servicer that summarizes the review of your escrow account.
This annual review is done to ensure that the servicer has collected enough money to cover your property taxes, homeowners insurance, and any other expenses paid through escrow.
The statement helps you understand whether you have an escrow surplus, escrow shortage, or whether your monthly mortgage payments will change.
Here’s a breakdown of what the escrow analysis statement includes and what you can expect:
Key Components of an Escrow Analysis Statement:
Beginning and Ending Balance:
- The statement will show the beginning balance of your escrow account and the ending balance after the review period. This helps track how much money was deposited and used for taxes, insurance, and other expenses over the year.
Projected Disbursements:
- This section outlines the expected payments the servicer anticipates making from your escrow account over the next 12 months (e.g., property taxes, homeowners insurance premiums, etc.).
Escrow Shortage or Surplus:
- The statement will indicate if there is a shortage or surplus in your escrow account. This occurs when the actual costs differ from the estimated amounts.
- Shortage: If the funds in the account are not enough to cover upcoming expenses, you’ll have to pay the shortage or have it spread over your future mortgage payments.
- Surplus: If more money was collected than necessary, you may receive a refund or have the overage applied to future payments. Here Escrow analysis shortage.
Monthly Payment Adjustments:
- If there’s a shortage or surplus, your monthly mortgage payment may change to account for this. The statement will show the current monthly payment and the new adjusted payment.
- This includes your mortgage principal and interest plus the updated escrow portion of your monthly payment.
Escrow Payment Schedule:
- It will provide a detailed schedule showing how much is collected each month for escrow and when the servicer expects to make disbursements for property taxes, insurance, and other expenses.
Options for Paying a Shortage:
- If there is a shortage, the statement will often provide options:
- Paying the shortage in full: You can pay the shortage as a lump sum to avoid increasing your monthly payments.
- Paying the shortage over 12 months: The shortage can be divided and added to your monthly mortgage payment.
Cushion:
- Many servicers keep a cushion or reserve in the escrow account (typically equal to two months’ worth of escrow payments) to ensure there’s enough money to cover unexpected increases in property taxes or insurance.
Example of Common Scenarios:
- Escrow Shortage: If your property taxes increased during the year, the escrow account may be underfunded. The statement will show a shortage, and you will have the option to pay the extra amount all at once or increase your monthly mortgage payments to cover the shortfall.
- Escrow Surplus: If your taxes or insurance costs decreased, you may have more money in your escrow account than needed. In this case, your mortgage servicer might refund the excess to you or adjust your monthly payments down.
Why You Receive It:
Mortgage servicers are required by law (under the Real Estate Settlement Procedures Act or RESPA) to perform an escrow analysis and provide the statement at least once a year.
This statement keeps you informed about changes in your escrow account and helps ensure you’re not overpaying or underpaying for your taxes and insurance.
What to Do with the Escrow Analysis Statement:
- Review It Carefully: Check the amounts and make sure they align with your property tax and insurance bills.
- Consider Payment Options: If there’s a shortage, decide whether you want to pay it in full or spread it out.
- Contact Your Servicer: If you notice any discrepancies or have questions, contact your mortgage servicer to clarify.
This statement helps keep your mortgage payments in line with actual costs and ensures that your taxes and insurance are paid on time. Here is Escrow analysis statement.