If you’ve received a check from your mortgage escrow account, you may be wondering why. Mortgage escrow accounts are established to hold funds for property taxes, homeowners insurance, and other related expenses. While it’s common for your escrow account to cover these expenses directly, there are several reasons why you might receive a check instead:
1. Overpayment
If your escrow account collects more funds than necessary to cover your property taxes and insurance, you may end up with a surplus. In this case, your mortgage servicer may issue you a check for the overpayment amount.
2. Changes in Taxes or Insurance
If there are changes in your property taxes or insurance premiums, such as a decrease in tax assessment or a lower insurance rate, your escrow account may have excess funds. As a result, you may receive a refund check reflecting the lower expenses.
3. Surplus Funds
Sometimes, your escrow account may build up surplus funds over time due to fluctuations in tax and insurance payments or adjustments made by your mortgage servicer. If the surplus exceeds a certain threshold set by federal regulations, you may receive a refund check.
4. Loan Payoff or Refinance
If you pay off your mortgage or refinance your loan, any remaining funds in your escrow account will be refunded to you via a check. This ensures that you receive any funds that are rightfully yours after the loan is closed.
5. Error or Adjustment
In some cases, receiving a check from your escrow account may be the result of an error or adjustment made by your mortgage servicer. If you’re unsure why you received a check, contact your servicer for clarification.
Conclusion
Receiving a check from your mortgage escrow account can be surprising, but it’s usually a result of overpayment, changes in taxes or insurance, surplus funds, loan payoff, or adjustments made by your servicer. If you have any questions or concerns about your escrow account, don’t hesitate to reach out to your mortgage servicer for assistance.
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