Q: I always check my mortgage statement each month. The escrow account seemed unusually high in comparison to other months. Should I be concerned, and what exactly is an escrow account?
A: “Yes, you should be concerned," warns Erica Yitzhak, a real estate attorney in New Hyde Park. "First, escrow is a separate account set up by major banks to pay for three expenses: property taxes, homeowner’s insurance, and mortgage insurance on behalf of the borrower. Most homeowners don’t want to be responsible for tracking and making three extra payments, x times a year on top of making their mortgage payment on time. So instead, the bank does it for you. A portion of every mortgage payment you make is deposited into your escrow account to pay for these expenses.”
"If you suspect that the escrow balance seems too high, it may mean that your taxes and insurance are not being paid by your lender. If you are unsure, immediately contact your lender and or the receiver of taxes from your town to confirm that payments are being made,” says Yitzhak.