ESCROW REFUND: What It Is and How Can I Get One?

ESCROW REFUND: What It Is and How Can I Get One?

ESCROW REFUND: What It Is and How Can I Get One?

The escrow process is a real estate transaction that makes it easier for both buyer and seller to hold their investments. The escrow provider ensures that both parties’ needs are accommodated and provides protection for both sides in case something goes wrong. Many people want to know if a refund is possible during escrow. Before knowing when you can get an escrow refund, we first define what an escrow refund is.

GET AN ESCROW REFUNDWhat Is An Escrow Refund?

An escrow refund is a process wherein your escrow account contains excess funds. There you will receive a check with the amount of any remaining balances.

You should remember that not all balances in your escrow account are eligible for a refund. You can get an escrow refund unless the remaining balance is at least $50. If the escrow account has an excess amount of less than $50 at the time of the annual escrow account analysis, then the loan servicer has the option to refund the excess. But the loan servicer could choose to put the excess escrow money against the following year’s escrow payments instead. Another thing is that if there is an excessive amount on your escrow account after you finish paying off the loan, you are qualified for an escrow refund regardless of the amount.

Escrow fees are among the most commonly requested questions by buyers and sellers in the real estate industry. But when do you get an escrow refund? It’s a question that confuses buyers and sellers. Here’s the answer.

When Do You Get An Escrow Refund?

GET AN ESCROW REFUND - mortgageAn escrow refund can happen under different factors. Here are a few instances in which you are qualified for an escrow refund:

  • The mortgage has been entirely paid-off: You are qualified for an escrow refund if you have a remaining balance in your account after you finish paying off your mortgage. Loan servicers should give you the escrow refund within 20 days after you pay your mortgage.
  • There is a reduction in tax bills: If your tax bills have been reduced, you are qualified for an escrow refund. Tax bills may change on a year-to-year basis.
  • There is a change in rate in insurance companies: You are qualified for an escrow refund if your homeowner’s insurance has changed for a better rate. You have to contact your servicer about your new homeowner’s insurance policies. You should pay your homeowner’s insurance policies in advance to avoid an escrow shortage because you have to pay for those two policies. You’ll want to make an escrow-only payment in the refund amount to prevent deficiency.
  • Had overpayment upon purchase: If you had paid an extensive amount at closing, you are qualified to get an escrow refund.

Get an Escrow Refund

Escrows are very helpful in your real estate transactions and in protecting your money. Escrow refund is possible but under specific conditions. To know more about escrows and escrow refunds, visit our page https://www.neweraescrow.com/ and contact our expert escrow officers.

Sources

James Chen. (2022, June 30). Refunding Escrow Deposits (REDs). Investopedia. https://www.investopedia.com/terms/r/refunding-escrow-deposits.asp

Sarah Sharkey. (2022, August 15). Escrow Refund: What Is It and When Does It Occur?. Rocket Mortgage. https://www.rocketmortgage.com/learn/escrow-refund

James Chen. (2022, April 30). Crossover Refunding. Investopedia. https://www.investopedia.com/terms/c/crossoverrefunded.asp

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