Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What is the Minimum Escrow Balance?

Balance escrow minimum
0
Posted

What is the Minimum Escrow Balance?

0

A. The first step in completing your escrow analysis is projecting the amount of your tax and insurance bills for the upcoming 12-month period. We calculate the minimum acceptable balance, or cushion, in your escrow account for the year. Under federal law, we require a cushion of 1/6 of the year’s projected escrow disbursements, or, a two-month cushion. This cushion covers unexpected or increased disbursements, or disbursements we make before your payment arrives. The cushion amount may vary if your loan documents or applicable state law differ from federal law. Mortgage insurance (PMI or MIP) is not considered in calculating the Minimum Balance, and there is no cushion for mortgage insurance.

Related Questions

Thanksgiving questions

*Sadly, we had to bring back ads too. Hopefully more targeted.