An escrow account is a special savings account that’s typically set up when you close on your mortgage loan. The account is used to hold funds for future payments of items relating to the property. These include:
- Property taxes
- Homeowners insurance premiums
At your closing, you will pay an initial amount for each of the items to start your escrow account.
- You won’t have to pay large, lump sum payments during the year. Your taxes and insurance are paid on time so you avoid the risk of lapsed insurance coverage or delinquent taxes.
- Payment increases are taken care of. The mortgage servicer allows for possible increases in tax or insurance premiums when calculating your monthly escrow payment.
- Fund shortages are covered. Often mortgage servicers will pay taxes and insurance premiums when they are due, even if all the money for these bills has not yet been collected. Your upcoming escrow payments are adjusted to make up for any shortages or overages.
If you have any questions or if we can help you in any way, please contact Member Services at (804) 323-6800 or (800) 285-6609.