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We project annually how much you’ll need to set aside in your escrow account for the upcoming year. The projected amount is based on the taxes and/or insurance premiums you paid during the previous 12 months. The total amount is divided by 12 to determine your projected monthly escrow payment. An important thing to keep in mind: customers are required to have a “cushion” in their account, which is equal to two months of escrow payments.
An escrow shortage occurs when, even with a positive escrow balance, there are not enough funds in the account to pay your yearly projected taxes and insurance. By having a two-month cushion, you should have enough funds to cover unexpected tax and/or insurance increases; however, in some cases, insurance and tax premium increases may still exceed the amount in your escrow account.
Please note: Changes to your tax and/or insurance premiums could result in a change in your monthly loan payment. This information is supplied on your escrow analysis statement described above.
An escrow surplus occurs if your taxes and/or insurance costs were lower than expected.
Every year, we review your escrow account to make sure there’s enough money in it to cover your taxes and/or insurance premiums. We send you a summary statement of this report on August 1st. It includes a review of escrow account activity during the past year, and payment projections for the next 12 months. It’s important that you take the time to review this document when you receive it.
Your escrow account, in a sense, is a savings account that is managed by First Internet Bank as your mortgage servicer. We deposit a portion of your mortgage payment into the escrow account to cover your estimated real estate taxes and insurance premiums.
Changes to mortgage interest rates are as hard to predict as the stock market. Nobody can really know for certain when they’re going to change or whether they’ll go up or down — and they may even change several times within a single day. If rates are on an upward trend, then you’ll want to consider locking the rate as soon as you are able. But before you lock your rate, talk to your Loan Officer for help in choosing the right rate lock period for your situation.
The time to close may vary depending on property and borrower circumstances, but we typically close the majority of home purchase mortgages and refinance transactions in 40 days or less. Speak with one of our experienced Loan Officers about your specific situation and we’ll work with you to meet your closing date.
Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth and Federal Reserve policy. Over time, inflation has the largest influence on the level of interest rates. A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase. Our nation’s central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.