Can I make additional payments to my mortgage escrow account to avoid a shortage?

Rest assured, you won’t! There’s no charge or penalty if your mortgage escrow account is short.

Great question! It’s an account used to pay for items related to your property, such as taxes and insurance, and is a calculated portion of your monthly mortgage payment.

Fear not! Your shortage is spread over the upcoming escrow period at no charge.

Your mortgage escrow payment is composed of three portions:

1. The anticipated amount needed to make your tax and/or insurance payments in the coming year.
2. A cushion to cover two months of anticipated payments.
3. Catch-up amounts for a shortage (if applicable). A shortage occurs when the amount that was paid for taxes and/or insurance increased from what was anticipated. The anticipated amount is always the amount of the prior year’s payments.

We’re happy to help provide some clarity here! Some mortgage loans are required to have an escrow account, including the tax and/or insurance payments. Please contact us to discuss your options.

In general, any of the below conditions require you to have a mortgage escrow account:

• If your loan-to-value (LTV) is over 80%
• If your mortgage loan has an active private mortgage insurance (PMI) policy
• If your mortgage loan has rural housing insurance
• If you have a VA mortgage loan
• If you have an FHA mortgage loan
• If you have any late credit payments within the last 12 months
• If your mortgage loan has required flood insurance, you must escrow for both the flood and homeowner's insurance