WHAT IS AN ESCROW ACCOUNT?
Your Mr. Cooper escrow account is easy to understand if you think of it as a sort of “piggy bank.” Every month, a part of your mortgage payment goes into it. And the growing pile just sits there… until your homeowner’s insurance and property tax payments come due.
Then we use the money you’ve set aside in escrow to make your payments for you. You never need to worry about whether you’re saving enough, or when your due dates are.
WHY DO I HAVE AN ESCROW ACCOUNT?
Some homeowners choose to use escrow to simplify keeping current with taxes and insurance. (If that’s you, you’re probably not asking where yours came from.)
Many escrow accounts are a required part of a loan agreement. (Always clearly stated in the agreement documentation, of course.) In this case, we open the account at closing or shortly after.
If your loan was transferred to us, and you had an escrow account with your previous servicer, your escrow account was transferred as well.
Feel free to contact us any time with questions about your escrow account.
WHAT’S A MINIMUM REQUIRED BALANCE?
Your escrow account works best when it always has a little extra in it. Why? For one, tax and insurance rates can go up. When this happens, we want to be sure there’s enough in escrow to cover it.
We also want to minimize any resulting impacts to your monthly mortgage payment.
Here’s where your minimum required balance (also known as a cushion requirement) saves the day.
How much is your minimum required balance? In accordance with state and federal law, we may require your escrow account to contain at least 2x your monthly escrow contribution at all times.
So for example, if you’re currently required to put $500/month into escrow, your minimum required balance will typically be $1000.
As math goes, it’s pretty easy.