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Escrow Accounts
At First Guaranty Bank, we want to help you better understand your escrow account(s). Below you'll find frequently asked questions and helpful tips for understanding your escrow account(s).
What is an Escrow Account and is it required?
An escrow account is an account set up by your mortgage lender to pay certain property related expenses. Typically, it's required and controlled by the lender to make sure the homeowner is able to budget monthly for the additional costs that come with owning a home--expenses like property taxes, homeowners' insurance, flood insurance, and private mortgage insurance (PMI) to name a few.
Escrow requirements can vary by loan type and lender. For instance, if your down payment is more than 20%, you may not need a mortgage escrow. But some types of mortgages—like Federal Housing Administration loans—require borrowers to have an escrow account.
Escrow FAQs
Why did my payment change?
The annual amount required to fund your escrow account depends on how much your insurance company and tax authority invoice First Guaranty Bank. Because these amounts can change, your escrow payment can also change. You can view your escrow analysis for more information.
What is a shortage?
Escrow shortages happen when your real estate taxes or insurance premiums increase OR if they happen to be higher than expected when you close your loan. If this happens, your escrow account will be short and additional funds will need to be collected to satisfy the shortage.
What is a surplus?
A surplus happens when you have more in your escrow account than you'll need to pay escrowed items. You will be reimbursed the entire amount if the surplus is $50 or more. NOTE: if the surplus is under $50, the amount will be placed in your escrow account and your payment will be reduced accordingly.
What is a deficiency?
If your final escrow balance is negative, you have a deficiency. Unless you choose to pay these amounts in full immediately, both a shortage AND a deficiency will increase your monthly escrow payment.
What is a cushion?
A cushion is the amount you (as the borrower) are required to keep in your escrow account to cover unexpected increases. It is shown as "REQUIRED LOW BALANCE" on your annual mortgage escrow account statement.
How can I keep my escrow payment from increasing?
Review your annual real estate tax assessment and discuss any concerns/discrepancies with your local taxing authority. You may qualify for exemptions you are not aware of.
Still Have Questions?
If you have any questions about your taxes, insurances, or changes in your monthly payment, please do not hesitate to contact your FGB loan officer or feel free to fill out the contact form and someone from our team will get back to you shortly.