What In The World Is An Escrow Shortage?
Author:
Kevin GrahamApr 25, 2024
•5-minute read
If you’re like a majority of homeowners today, you have a mortgage with an escrow account. And, like most of those homeowners, you may understand the basics of escrow. But when it comes to shortages and overages, it can be difficult to keep it all straight.
What Is An Escrow Account?
An escrow account is an account that holds the funds you need to pay your property taxes and homeowners insurance. It’s not an account that you manage directly. It’s simply a holding account that contains the funds you pay every month to ensure your taxes and insurance bills are paid.
By consolidating these payments into your monthly mortgage payment, you only have to worry about one bill rather than several bills all due at different times. Your mortgage lender helps by making sure you have enough money in your account to cover your bills; then when the bills are due, they pay them on your behalf. It’s a service that is designed to make your life easier.