Many homeowners have an escrow account associated with their mortgage, from which their lender pays homeowners insurance and property taxes when they come due. Escrow payments may increase or decrease due to several factors. If your escrow account is found to have extra money in it, you may be issued a refund.
How Surpluses Happen
Because tax bills and insurance premiums often shift from year to year, we review escrow balances at least once a year. This review—called an escrow analysis—compares expected costs with the money held. We usually keep a small cushion (up to two months of payments) to cover unexpected tax or insurance increases.
If the analysis shows that more money is being held than necessary, you may end up with an escrow surplus. In simple terms, this means you’ve paid in more than what’s required to cover upcoming bills.
Common Causes for Refunds
- Lower-than-expected costs: If projected tax or insurance costs were higher than what you actually owed, the difference creates extra funds.
- Rate adjustments: A drop in insurance premiums or property tax assessments can leave excess money in your account.
By law, if the surplus is greater than $50 (and your mortgage is current at the time of analysis), we must issue you a refund check. Some states have different rules for surplus refunds (such as New York, Maryland and Nevada).
Getting Your Refund Check
After the analysis, we will send a detailed letter explaining the results. If you qualify for a refund, a check is mailed along with that letter. If we have your email, we will also provide a personalized video.
Have Concerns About Account Errors?
Errors in escrow accounts are rare but possible. If you believe your balance or refund is incorrect, reach out to your lender’s customer service team. Most offer online chat or phone support to quickly resolve issues.
Other Questions?
If you’re unsure about how your escrow account works, explore our library of resources or reach out to us with questions.