Can I Spend My Escrow Refund?

Yes, you can spend your escrow refund. An escrow refund is a payment your mortgage servicer issues when there are excess funds in your escrow account following an annual account review. Your escrow account is used to hold funds for payment of homeowner’s insurance and property tax.

Reasons for Escrow Refunds

  • Lower taxes than anticipated: The portion of your mortgage payment reserved for property taxes is an estimate based on past tax bills. If your community adjusts its tax rate or lowers your property assessment, that could cause an overage in your escrow account.
  • A better homeowners insurance rate: If your insurance provider lowers your rates, the amount collected in escrow to pay your annual premium could be excessive, resulting in a refund.

Timing of Escrow Refunds

Escrow refund checks are typically issued a few weeks after the annual adjustment your mortgage servicer conducts on your escrow account. That could be any month of the year, but it’ll be the same time every year. Your mortgage servicer can tell you when that is.

What to Do with an Escrow Refund

An escrow refund can be a welcome windfall, so before you deposit it in your checking or savings account, consider the best way to make use of it. Some options to consider include:

  • Bolster your household emergency fund.
  • Pay down your credit cards.
  • Make an extra payment on your car loan or mortgage.

Additional Information

  • Escrow refunds are relatively rare, so if you get one, make the most of it.
  • If you receive escrow refunds regularly, your mortgage servicer may need to adjust your monthly payments to prevent escrow overages.
  • If you have any questions about your escrow account or escrow refunds, contact your mortgage servicer.

Here are some additional resources that you may find helpful:

What do you do with an escrow refund check?


What should I do with leftover escrow money?

Most lenders will happily accept extra funds as a cushion of sorts, as long as you specify that the money is for the escrow account. Any excess money left in the escrow account is likely to be refunded to you at the end of the year, so you lose nothing as long as you can afford to set aside that money in escrow.

Can money in escrow be used?

No, you cannot take money out of your escrow account. The money held in a mortgage escrow account is held by the lender or loan servicing company on your behalf, to serve a specific purpose, and it is not typically accessible to the homeowner.

Can I cash an escrow surplus check?

If your taxes and/or insurance costs were lower than expected, your account may have a surplus. If the surplus is $50 or more, a surplus check will be attached to your Annual Escrow Analysis. Please detach the check and cash it. For surpluses less than $50, your money will be left in your escrow account.

Can I take money out of my escrow balance?

Mortgage payments usually include some portion held in escrow for property taxes and insurance. Many lenders require escrow accounts to protect their investment and ensure that taxes and insurance are paid. You can’t access the money in your escrow account, and banks generally don’t pay interest on your escrow balance.

Can I get a refund from my escrow account?

You may receive a refund from your escrow account for any unused funds. If your tax bill decreases, that means the amount collected from your monthly mortgage payment over the year will be more than what is actually due. The excess amount in your escrow account could be refunded to you after escrow analysis.

Can I get a refund if my escrow account has an overage?

If an escrow account analysis shows that the escrow account has an overage, you’re eligible for an escrow refund and will receive an escrow overage refund check with the remaining balance. You could get an escrow refund if its balance becomes higher than necessary or once you’ve completely paid off your mortgage. What Is an Escrow Balance Refund?

When will I receive my escrow refund if my mortgage is closed?

Any time an existing escrow account is closed and there are remaining funds, you should receive an escrow balance refund for the remaining balance. If you paid off your mortgage, you should receive a check from your lender within 20 days. What Happens to Your Escrow Refund When You Refinance Your Mortgage?

When do escrow refunds occur?

Escrow refunds usually occur during annual reviews. When excess funds are identified, your lender has 30 days to send you a check You may receive an escrow refund if you paid more into your escrow than necessary, you’re closing an escrow account, you’ve paid off your mortgage or you’re refinancing

Leave a Comment