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US mortgage escrow FAQs

An escrow account is set up at closing. The purpose of an escrow account is to help you budget for expenses such as property taxes and insurance. If you are in a special flood hazard area, your flood insurance will also be covered by the escrow account. 

To fund the escrow account, we add a portion of your property taxes and insurance premiums to your monthly mortgage payment. When your tax or insurance amounts are due, we pay the amounts from your escrow account. This saves you time. It also gives you peace of mind that your tax and insurance bills will be paid on time.

If your property is located in a special flood hazard area, we are required to escrow for flood insurance. Other than flood insurance, you can waive the escrow if you meet certain conditions. Email us at to find out if and how you can waive the escrow requirement.

The initial amount in the account will be based on the latest tax and insurance bills paid on the property. If we are notified of a change in dues, we will update our projection for the following year. Without such information, our projection is based on how much was paid in the prior 12 months. We then apply the monthly payment to 13 months. The additional month allows us to cover any increases. 

For example: 

You paid $3,000 in property taxes and $1,200 for your homeowner's insurance. Your annual cost was therefore $4,200. We will look at this cost once you open an escrow account. If there are no rate changes, we will project payments to your escrow account to cover $4,200 in bills over 12 months. 

We will therefore add $350.00 per month to the escrow portion of your mortgage payment. Since we require an extra month’s payment, we would add $29.17 to your monthly payment for a total of $379.17. You may also choose to pay us $350.00 directly to cover the shortage. 

Your insurance provider will notify us of any changes to your policy and premiums. 

Tax authorities will notify you directly when there is a change to your tax amount. Authorities do not share your tax bill with us. We are notified of your tax bill only when it is due. 

We also work with a tax authority vendor who tracks property taxes across the US. Our vendor tells us where taxes are most likely to increase or decrease, and by how much.

This analysis includes projections for the next 12 months. It shows you how much money you need to maintain in your escrow to cover your anticipated payments. If there is too little being collected, we will increase the escrow payment to make up the difference. If there is too much money, we will send you a refund. The analysis also shows how our projections will impact your mortgage payments. This information is presented in your escrow account disclosure statement

Changes in your escrow payments may be due to changes to your insurance premiums or tax rates. Your real estate taxes may also change if you build or expand your home. Keep in mind that the initial amount in the account was based on the latest tax and insurance bills paid on the property. Your actual payment amounts may differ from this initial projection.

If you have a surplus of more than $50.00, we will credit the amount to your UNFCU account. We can also issue a check. If you have a surplus of $50.00 or less, it will remain in your escrow account.