The Escrow Statement Arrived. Now What?

A practical guide to understanding escrow increases and what you can do about them.

Every year, homeowners open an escrow analysis statement and set it aside, unsure what they're looking at. If that sounds familiar, you're not alone. Let's break it down.

What Is Escrow?

Your escrow account is managed by your mortgage servicer. Each month, part of your payment is set aside to cover your property taxes and homeowner's insurance. When those bills come due, your servicer pays them on your behalf, so long as you have an escrow account that accompanies your mortgage loan.

Why Did My Payment Go Up?

Here's the part that surprises a lot of people: even with a fixed-rate mortgage, your payment can still change. On most fixed-rate mortgages, your principal and interest amounts are fixed. Your escrow is not.

Property taxes and insurance premiums shift every year, and your escrow must keep pace. Right now, two things are pushing costs higher:

🏠 Property taxes: Rising home values have led to higher assessments in many markets, which means higher tax bills.

🛡️ Homeowner's insurance: Claims, construction costs, and insurers pulling back from certain markets have driven premiums up significantly, sometimes 20 to 40% at renewal.

When either of these rises, your servicer adjusts your monthly payment to stay on track.

How to Read Your Escrow Statement

Projected Disbursements: What your servicer expects to pay for taxes and insurance over the next 12 months. This is the number driving any change in your payment.

Shortage or Surplus: A shortage means your account isn't on track to cover what's coming. A surplus means there's more than needed (and you may get a refund).

New Monthly Payment: Your adjusted contribution going forward.

How Do I Get It Lowered?

It depends on where the increase is coming from.

Insurance is where you have the most control. If you haven't shopped for your coverage in a few years, now is a good time. Rates vary widely between carriers, and a quick comparison can produce real savings. Also worth asking: Is your deductible lower than it needs to be? Are your home and auto policies bundled?

A good rule of thumb: review your homeowner's insurance every two to three years. Loyalty doesn't always come with savings.

Property taxes are harder to move, but not impossible. If your home's assessed value seems higher than its actual market value, you have the right to appeal. Check with your county assessor's office for deadlines and next steps.

A surplus means good news is already on the way. When a surplus exceeds a certain threshold, your servicer is typically required to refund it. Check your statement; a check or credit may already be in motion.

Switching Insurance: A Few Things to Know

If you decide to change carriers, the process is a little different when a mortgage is involved.

Before canceling your current policy, notify your servicer and give them your new insurer's name, policy number, and premium. Have your new insurer send the declarations page directly to your servicer. And always make sure the new policy is active before canceling the old one. A gap in coverage can trigger "force-placed" insurance from your lender, which is costly.

Can I Request an Analysis?

Yes. You don't have to wait for the annual review. If your taxes or insurance have changed significantly, you can contact your servicer and request an interim escrow analysis. When you call, ask whether a shortage repayment plan is available if you'd rather spread the adjustment out over time.

The Bottom Line

Escrow increases are frustrating, but they're not a mystery. Start with your projected disbursements, compare them to last year, and you'll know exactly what changed. From there, you have real options.

Questions? The Servion team is here to help.

👉 Contact Servion