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Understanding Escrow Accounts
An escrow account is a common feature of a mortgage loan. An escrow account makes it easier to pay necessary expenses on your property – like taxes and insurance – by incorporating them into your monthly mortgage payment, rather than paying them in lump sums.
The amounts are spread out among your monthly mortgage payments:
While an escrow account may be required depending on the terms of your loan, many members prefer utilizing an escrow to pay their taxes and insurance because:
- Making payments each month into the escrow account lessens the burden of the twice annual tax bill (likely over $1,000)
- Payments are made on time
- Changes in upcoming year’s taxes are automatically adjusted by the lender, Wings, and reflected on monthly payments leading up to new tax bill
Annual Escrow Review
Once each year, Wings will review your escrow account to ensure that we are collecting the right amount to pay your taxes and insurance. If the amounts for these bills have changed from the previous year, you will receive a notification about a new monthly payment.
Popular Escrow FAQs
What is an escrow account?
An escrow account is an account established and managed by your lender for the purpose of paying taxes and/or insurance on your home. These expenses are factored into your monthly mortgage payment and your lender conveniently pays them when they are due.
Why would I need an escrow account?
If your down payment or equity in your home is less than 20%, an escrow account is usually required by your lender. You may choose to have an escrow account for the convenience and peace of mind of knowing that your taxes and/or insurance will be paid on time.
What is the benefit of an escrow account?
An escrow account provides peace of mind that your taxes and/or insurance will be paid on time without you having to budget for these large items separately.