{"id":33929,"date":"2022-04-09T12:07:56","date_gmt":"2022-04-09T12:07:56","guid":{"rendered":"https:\/\/businessyield.com\/?p=33929"},"modified":"2022-04-09T12:08:33","modified_gmt":"2022-04-09T12:08:33","slug":"escrow-surplus-check","status":"publish","type":"post","link":"https:\/\/businessyield.com\/bs-business\/escrow-surplus-check\/","title":{"rendered":"ESCROW SURPLUS CHECK: How They Work and What to Do With It.","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Escrow checks are vital and important. It is useful to pay your insurance premiums, tax bills, and annual property bills. However, an escrow check surplus can occur from time to time, and you may be eligible for reimbursement from your mortgage lende<\/a>r. Some people are unsure how to put their escrow surplus checks. Hence, this article will explain what you may do with your surplus checks in a way that will be profitable to you and how to go about escrow surplus check that wasn\u2019t cashed. <\/p>\n\n\n\n

What Is an Escrow Account?<\/span><\/h2>\n\n\n\n

If you’re like the majority of homeowners who have a mortgage, your monthly payment includes more than just principal (the money you borrowed) and interest (what the bank is charging you for using its money). Part of your annual property tax bill, as well as a percentage of your annual homeowner’s insurance <\/a>premium, are inclusive in your payment. Your lender takes this money from you in 12 equal installments over the course of a year, deposits it in an escrow account, and uses it to pay your taxes and insurance premiums when they’re due. <\/p>\n\n\n\n

The account must have enough money in it to pay a tax or insurance bill when it is due. Your lender will establish your escrow payments to that level to ensure that this happens. However, the lender, on the other hand, may ask you to have a “cushion” in the account to cover unexpected cost rises.<\/p>\n\n\n\n

So because money reimbursed in the event of an escrow surplus is money you pay to the lender, it isn’t taxable income because you’re just getting it back after paying tax. For example,\u00a0 When you return a microwave to the vendor and obtain a refund, that money is not taxable income; the concept is the same here.<\/p>\n\n\n\n

What Is an Escrow Surplus Check?<\/span><\/h2>\n\n\n\n

You have an “escrow surplus” if the quantity of excess money in your escrow account exceeds the permissible cushion. An excess of up to $50 can apply to your future escrow payments by the lender. However, if your surplus exceeds $50, you have the right to a return escrow surplus check.<\/p>\n\n\n\n

Let’s assume that your property taxes will be $7,000 this year and that your homeowner’s insurance will be $1000. To offset these charges, your escrow account must have at least $8000 in it. The mortgage company has set up an escrow cushion of 1\/6 of the amount, which is $1000 hence your total escrow will be $9000. Meaning, if your monthly mortgage payment is $500 for escrow, you’ll put $6,000 into your escrow account, which is $400 more than the authorized cushion. You will receive a refund of $400. If you don’t want a refund, your lender may let you use the extra money to lower future payments or pay down the principal on your loan.<\/p>\n\n\n\n

If you sell your house and have money left over in your escrow account, you’ll get a refund of the entire amount, even if it’s less than the cushion, because future property taxes will be prorated and the buyer will be responsible for them. Unpaid taxes will be deducted from the purchase price at the time of closure.<\/p>\n\n\n\n

Situations That May Lead To Escrow Surplus Check Not Being Cashed<\/span><\/h2>\n\n\n\n

Unclaimed money is the most common source of uncashed checks in escrow accounts. Companies that manage escrow accounts for a variety of transaction types typically have effective standard processes in place to close escrow when a property is sold or paid off, thus amounts in escrow accounts are rarely left. Checks are cut to transfer any outstanding amounts to owners and close the escrow account at the time of a property sale or other transaction.<\/p>\n\n\n\n

When a check does not reach the owner or the owner receives the check but does not cash it for whatever reason, the property becomes escrowed and becomes unclaimed. Situations that may result in the escrow-related unclaimed property include the following:<\/p>\n\n\n\n