Each year we project how much you will need in your escrow account for the upcoming year. We base it on the amount of taxes and/or insurance you paid during the past 12 months.
The total you paid is divided by 12 to get your projected monthly escrow payment, which you pay each month as part of your monthly mortgage payment.
Sometimes, your payment must be adjusted to ensure your monthly balance remains above the required minimum balance during the next 12 months. This minimum balance is typically
equal to two months of escrow payments, also known as a "cushion".
If your taxes and/or insurance change during the next year or your monthly escrow balance falls below the required minimum amount, you could have a shortage or surplus in your
account when we do an annual Escrow Analysis next year.