What is an escrow account and why did my payment change?

The short answer

Escrow collects taxes and insurance with your payment. When those bills rise, your payment rises, even on a fixed rate loan.

4 min read

How it works

Your servicer estimates the year's property taxes and homeowners insurance, divides by twelve, and collects that amount alongside principal and interest. When the bills come due, the servicer pays them.

Once a year the account is analyzed. If the bills came in higher than estimated, you get a shortage and a new monthly figure. If lower, you get a refund.

Why fixed rate payments still move

A fixed rate fixes principal and interest only. Taxes and insurance are outside the lender's control, and in Pennsylvania a county reassessment or a school district increase can change the escrow portion meaningfully.

Budget for a modest annual increase rather than being surprised by one. Reading the escrow analysis when it arrives takes five minutes and prevents most confusion.

Corie Adams Lending Team

Corie Adams
Producing Branch Manager · NMLS #1875205
Network Funding, LP · NMLS ID #2297

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Corie Adams Lending Team is a branch of Network Funding, LP. Network Funding, LP, NMLS ID #2297, is an Equal Housing Opportunity Lender. Licensing and state disclosures are available through Disclosures & Licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org). This website is not a commitment to lend. Rates, programs, payments, and qualification requirements are subject to change without notice and may vary based on individual circumstances.

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Payment examples shown on this site are illustrative only.