Adjusting escrow

If you have a mortgage with an escrow account attached, you'll receive an escrow analysis each year from your lender. Veridian's escrow analyses  are sent out annually in late October.

What is escrow?

When you take out a mortgage to buy a home, you actually take on three obligations: your loan, insurance and property tax. While you'll make payments on your mortgage each month, property taxes are typically billed twice a year and insurance payments can vary from carrier to carrier. That makes it easier to forget your insurance and tax payments – both to save for them and to make them.

That's where escrow comes in! Your lender will create an account separate from your mortgage on your behalf. Part of each monthly payment you make goes into that account, which your lender will use to pay your insurance and taxes for you. Escrow is not only convenient, it keeps your expenses even from month to month.

What is escrow analysis?

Your lender will look at your escrow account each year to make sure it'll have enough money in it when your tax and insurance payments are due. If it won't, or if the minimum balance would fall below an acceptable cushion, you'll be asked to cover the shortfall as a one-time payment or through higher mortgage payments over the next year. On the plus side, if there's too much money in your escrow account, you'll get that refunded to you. If your mortgage payment at Veridian changes for this reason, the change takes effect in December.

If you do have a shortfall, it's likely that your property taxes or insurance premiums are going up. If your insurance costs are rising, you can get a free quote from our friends at Veridian Insurance. They can compare plans from regional and national carriers to find the coverage you need at a better price.