When is escrow overage refund

The lender determines how much you pay each month by estimating the yearly totals for these bills. However, sometimes the lender overestimates, and you end up paying more than you owe. If this occurs, the lender details it on the statement provided to you at the end of the year and issues a refund if necessary. Homeowners have the responsibility to pay property taxes and homeowner's insurance premiums. If you don't make these payments on time, you could lose your home through tax foreclosure or have your policy dropped.

Your lender doesn't want either of these scenarios to happen because it has an interest in your property until the mortgage loan is paid in full.

To ensure that taxes and insurance are always paid on time, many lenders require their borrowers to maintain an escrow account. An escrow account helps you pay these expenses because you send money through your loan servicer every month instead of having to pay a big bill once or twice a year.

Many lenders require that you pay your taxes and insurance using escrow, so they can make sure that the bill gets paid. Each year, your bank receives updated information on your property taxes and insurance payments. More information is available in our Privacy Policy.

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In California, initial escrow instructions are established when the Uniform Residential Purchase Agreement and Joint Escrow Instructions is signed and accepted. The escrow company becomes the middle man, holding money while both parties complete their respective responsibilities in the transaction. If the sale falls through, the buyers might be eligible to get their earnest money deposit back as long as they canceled the transaction during one of the specified contingency periods.

Buyers receive a return of their escrow funds less any fees, such as appraisals or inspections, within 10 days from canceling the deal. If they are not eligible for the return of earnest funds, the escrow company sends it to the seller within the same time frame. Disputes may delay this timeline.