What are the Advantages of Mortgage Escrow Accounts?

Mortgage escrow accounts are used to mitigate the amount of risk you may experience as you’re paying your mortgage, but that isn’t the only benefit. Here are some of the other advantages you gain by hiring an escrow officer to hold your mortgage escrow accounts.


One of the main benefits of mortgage escrow accounts is the convenience of not having to worry about bills. Rather than budgeting money for your property taxes, homeowner’s insurance, and private mortgage insurance, the escrow account agent takes care of these expenses for you. You don’t need to remember when any of them are due or where to send the check. All you need to do is make a monthly mortgage payment.

No Saving Up

Once or twice a year, you’ll have to pay property taxes, which means it’s up to you to put aside money each month. You’ll also have to put aside money for insurance because you are responsible for paying them yourself. With a mortgage escrow account, you don’t have to save up. You make regular fixed monthly payments, and the escrow account agent handles it from there. This can be convenient for people who have a hard time budgeting to save on a regular basis.

No Late Fees or Delinquencies

No one wants to pay late fees or delinquencies, but sometimes we forget bills. The escrow account agent pays for your bills and ensures that they’re paid before the due date. This means that you’ll never have to worry about missed or late payments. With your bills paid on time, you avoid paying fees, and you don’t risk having your property insurance lapse or your title collecting a lien for unpaid property taxes.

Surplus or Shortage Considerations

You may not be putting enough cash into the account to cover all your escrowed bills. Your escrow agent looks over your account each year to make sure you’re putting enough away to pay bills. Sometimes you could be putting away too much, which means that you could receive cash back from the account. However, the escrow account agent could raise your escrow payment based on expected increases, such as an increase in property taxes.

Avoiding Sticker Shock

Property taxes are some of the highest expenses most people will have to pay. The nationwide average for property taxes in single family homes is between $50,000 to $100,000—which can be a pretty big shock unless you’re prepared. With an escrow account, the agent breaks down your property taxes into easy, manageable payments included with your monthly mortgage payment. No sticker shock. Plus, you can always ask your agent how much your property taxes are if you’re worried you’re spending too much.

Change in Property Tax or Insurance

Property taxes can change every year you pay them, and it can be hard to stay updated on when a change is going to happen. Insurance is much more likely to change based on the needs of your home as it gets older. So, how do you avoid being shocked by an increase in property taxes or insurance? An escrow agent has the job of staying on top of any changes in property taxes and insurance and letting you know to help keep your payments steady and accurate.

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Posted on May 22, 2023