Whether we already service your loan, or you’re thinking of getting a new mortgage with us, you’ve probably come across the term escrow somewhere during your homeownership journey.
Escrow is a special account that’s created when you first close on your mortgage. The funds in this account are used to pay your taxes and insurance. Because your lender also has a financial interest in your property, they set up an escrow account to help make sure that tax and insurance payments are made. When ServiceMac begins servicing your loan, we take over that account and make the escrowed payments for you.
How it Works
ServiceMac takes your monthly mortgage payment and contributes part of it to your escrow account. These escrow funds are then used to cover your required tax and insurance expenses. For the most part, payments are made out of the account at specific times of the year. The timing and frequency of tax payments will depend on which state you're in, and the timing of insurance payments will depend on when your loan was originated (but will occur around the same day each year).
Why have an escrow account?
Having an escrow account allows you to spread your payments out and pay on a monthly basis, so you can budget your money instead of paying a lump sum when taxes and insurance become due. And, because ServiceMac manages the account, you never have to worry about making tax or insurance payments. We'll always pay your taxes and insurance on time and take advantage of any early-payment benefits.