Video transcript: Understanding your Chase escrow account

Narrator:

Hi. I'm a Chase customer. Last year I got a new home and a new mortgage. I learned a lot. Honestly, I really don't know much about escrow. Luckily Chase gives me plenty of info to guide me through it all.

Here's what I learned. First, a monthly mortgage payment, whether it's a fixed or a variable rate, usually includes three things-- principal and interest, those are pretty clear, and escrow. What's that, you ask.

Escrow is a special account, like a checking account, that's set up so Chase can pay your property taxes and homeowner's insurance for you. I like the peace of mind knowing that they're paid by the bank on time. And I don't have to think about it. Helps me budget, too.

Want to know how escrow payments are calculated? Here it goes. My mortgage has a fixed rate. So monthly principal and interest stay the same. But my escrow amount can change if my property tax or homeowner's insurance goes up or down. That can cause either a shortage in my account or surplus in my account.

That's where the reserve, or cushion amount, comes in. It's a minimum balance that's kept in your escrow account that's typically equal to two months escrow payments. And it helps make sure that there's enough money in the account for possible increases in tax or insurance next year.

So how does Chase figure out next year's payment amount? They estimate it based on your tax and your insurance payments from the last 12 months. If you have a newer mortgage, the escrow amount is based on tax and insurance amounts provided at your loan closing.

So, based on last year, Chase finds the month with my lowest projected balance. If that month's balance is below the minimum reserve, I'll have a shortage. And I'll owe more money to make up the difference. If it's higher than the minimum reserve, more than $50, guess what? I get a nice surplus refund. Surplus refund.

So now I log on to chase.com get an update on my mortgage account. Turns out my escrow analysis was just done and I have a shortage on my account. Let me check it out.

OK. Now I get it. I see here in the tax column of my statement that taxes went up in the middle of the year. And Chase paid them for me, even though they were higher than projected. Thanks, Chase.

But I kept paying the same lower amount each month anyway. That's why at the beginning of the next 12 months when my analysis was done, my starting balance was much lower than expected. Then I started paying the higher amount each month to cover the higher taxes. But my minimum balance in November was still lower than the required amount. Because I have started out with such a low balance due to the tax increase. Tax increase, again?

Good thing Chase gives you ways to handle a shortage. I can pay it all now, or I can pay part of it now and spread the rest across the next 12 months as part of my mortgage payment, or I can pay nothing now and spread the entire shortage over the next 12 months.

Even if I pay all of the shortage amount now, my monthly escrow payment would still go up to cover the higher taxes. Well, there are easy tools right here on chase.com help me decide. The mortgage escrow information page has this great little calculator. Little calculator. I can use it to see how paying part or all of my shortage will affect my monthly payment. Love it.

It also compares my mortgage payment for next year to this year. I can only see this page during the month right after my analysis is run. The rest of the year, I can see the mortgage payment breakdown, but not the calculator and the comparison.

My statement shows my three payment options, too. So that's what I know about escrow. And if I want to learn more, I can go to chase.com any time. Hope this helped you. And thanks for watching.