Escrow Analysis


An escrow analysis is a term used for the process in which lenders analyze a borrower's escrow account to verify that a sufficient portion of the monthly payments received are being set aside to pay for yearly expenses, such as insurance and property taxes. Not every mortgage loan requires funds to be put into an escrow account; it depends on the amount that the borrower contributes as a down payment. If a certain percentage of the property value is paid for by a borrower's own funds, lenders are not required to withhold a certain amount each month for the escrow account. However, by conducting an escrow analysis, lenders can be assured that there will be enough funds to cover annual expenses, such as insurance and taxes. The escrow analysis is performed internally, and borrowers are not required to take any action.
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