Demystifying Mortgage Escrow Accounts: When to Expect Surprises

Register for the FREE toolkit with graphics and easy posts based on this podcast!  https://forms.office.com/r/kLg4K2VaKF

In this episode of Recharging with Champions, host Charlotte Harrill tackles the frequently asked questions about escrow accounts in the realm of homeownership. She explains that a mortgage escrow account is managed by the mortgage servicer to ensure there's sufficient funds to cover taxes and insurance payments when due. These accounts are subject to strict government regulations limiting the buffer to no more than one-sixth of the total bill.

Charlotte clarifies why you might receive a refund or experience an unexpected increase in your monthly payment despite having a fixed interest rate. Refunds occur when projected costs for taxes or insurance turn out lower than expected, while shortages happen if they rise. The company covers the shortage and redistributes the cost over the following year.

Lastly, she highlights that escrow accounts are often mandatory for loans with less than 20% down payment, and even for some loan types regardless of the amount down, to prevent delinquency in tax and insurance payments. Charlotte encourages sharing this knowledge as a tool for potential homeowners or to share wisdom on social media.