Get the Facts About Escrow Analysis

Get the Facts About Escrow Analysis

After the dust has settled and your boxes have been unloaded in your new home, you may find yourself reading the small language on your escrow contract and wondering, “What is an escrow analysis?”

It’s crucial to understand this phrase before, during, and after a real estate transaction. At Neighborhood Escrow, we’re proud to be the preferred escrow firm in the wider South Bay, and we’re always pleased to answer your escrow-related inquiries. We’ve been serving this community since 1985, and we’re excited to put our experience to work for you. Let us now shift our attention to the current problem.

What is an escrow analysis, and how does it work?

An escrow analysis is a once-a-year evaluation whose purpose is to ensure that you have adequate money in your escrow account at all times. Payment for each item in your escrow account is due at different times throughout the year — in fact, some insurances are only paid once every three years, further complicating the equation.

Your lender or escrow holder will use a variety of tactics to avoid a negative balance in your escrow account. In many situations, if the escrow agent forecasts that your account will be low one or more months in the future 12-month period, you will be required to make an additional two months of escrow payments to your escrow account as a buffer.

If you’d like, you can request an escrow analysis at any time, but they’re usually done once a year.

What if the escrow analysis reveals a supply or demand imbalance?

Following the completion of the escrow analysis, you may discover that you have a shortfall or excess in your escrow account. This occurs when your property taxes increase or drop as a result of changes in your property value. If there is a surplus, you will get an escrow check; but, if there is a deficit, your escrow payment levels will grow until the debt is paid off. The amount of your new monthly escrow payment will be adjusted to account for the increased taxes and/or insurance premiums.

Do you have any additional escrow questions?

Is this your first time purchasing a home? Do you have any additional concerns about escrow? Don’t be afraid to reach out! We’d be delighted to respond to your inquiries and put our experience to work for you. We are the preferred escrow firm in the wider South Bay, and we look forward to serving all of your escrow requirements.

We want you a seamless, stress-free real estate transaction, and when you pick Neighborhood Escrow as your partner, we can make it happen. Every time you engage with anybody on our team, you can depend on us to give you with accurate information, honest counsel, and the highest respect.

Call us now at 310-378-2456 with anything else we can help you with.

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