Basic Escrow Information

1. What is an Escrow Account?

An escrow account is an account that holds the funds for some of your monthly property related bills. This can include property taxes, flood insurance, mortgage/hazard insurance, and/or homeowner’s insurance. Each mortgage payment made is divided between principal loan balance, accrued interest on the loan and escrow impounds. The escrow impounds are deposited into the escrow account for you. We will use the funds from the escrow account to pay your tax and insurance bill(s) for you when they are due.

2. Am I required to have an Escrow Account?

Most members choose to have an escrow account for the convenience and are not required. However, you may be required to maintain an escrow account for situations such as:

• The property being in a high-risk flood area.
• You have a high-priced mortgage based on the value and the equity in your home.
• You have a FHA Loan.

3. Can I cancel my Escrow Account?

Escrow cancellations depend on several factors. If you are required to carry certain insurances on the mortgage, you may be ineligible for cancellation. In other circumstances, you can cancel your escrow and choose to pay your taxes and insurance independently. You may be eligible to cancel your escrow account if:

• Your Loan - to - value ratio is lower than 80%.
• You have good payment history.
• Your Loan is not a VA or FHA Loan (these typically require escrow).
• The property is listed as your primary residence.
• Your Loan is older than 6 months.
• The escrow balance is positive.

4. How do I open an Escrow Account?

Here, at Your Legacy F.C.U., we open the account for you at loan funding if you have indicated that you will be participating in the Escrow Account for your mortgage loan. Please contact us if you need additional information regarding Escrow Account Opening.

Escrow Account Payments

1. What bills are paid from my Escrow Account?

Homeowner’s Insurance, flood insurance, hazard insurance and/or property taxes.

2. What is Hazard Insurance?

Hazard Insurance protects the structure of the home from natural events/disasters, damage, destruction, vandalism, fire, smoke, etc. This is different than Homeowner’s Insurance, which covers personal property, loss, liability, etc.

3. Can I make extra payments to my Escrow Account?

Absolutely! You can contact us at 419-448-0191 to discuss the additional escrow payments and how they are applied.

4. Why is a minimum balance required in my Escrow Account?

A minimum balance, or “cushion”, is required and maintained for unexpected increases in your taxes and/or insurance payments. We divide your projected annual tax and insurance premiums by 12 and add that amount to your mortgage payment. We can require a cushion of 1-2 months to cover any unexpected costs or increases to your taxes or insurance.

5. I got a tax bill in the mail. Do I need to send it to you?

It is not necessary for you to send the bill to us. We obtain the billing information directly from the appropriate tax agency. Please keep these bills for your records. Remember, if you do not have an Escrow Account for your taxes, you are responsible for making those payments.

Analyzing your Escrow Account

1. What is an Annual Mortgage Escrow Statement and when do I get one?

An Annual Mortgage Escrow Statement is a yearly review of your escrow account to make sure the escrow impounds are enough to cover the annual requirements for your taxes and/or insurance premiums. This statement is disclosed to you in accordance with RESPA (Real Estate Settlement Procedures Act) showing the results of our review and how it will affect your mortgage payment. You will receive the Annual Mortgage Escrow Statement in the mail at the same time annually once a schedule has been established for your account.

2. What happens if I have a shortage in my Escrow Account?

If there is a shortage, you will be responsible for covering the deficit to avoid becoming delinquent on your tax payments and/or insurance payments. You have two options for paying the shortage:

• Pay the shortage over a 12-month period. We will distribute the sum of the shortage evenly to your new monthly mortgage payment over the next 12 months.
• Pay the shortage amount in full.

3. What happens if I receive a surplus check?

A surplus is usually due to your taxes and/or insurance payments being lower than projected. You may receive a check in the mail or choose to have the surplus applied to your escrow account.

4. My Annual Mortgage Escrow Statement says my escrow impounds are increasing. Will my monthly payment still increase even if I paid my shortage or got a surplus back?

Your payment may still increase if your taxes and/or insurance premiums increase, even if you pay any shortage amount in full or get a surplus refund. On your Annual Mortgage Escrow Statement, you will see a monthly projection of your upcoming escrow contributions, the due dates, and the amounts that we will pay on your behalf.

5. Who do I call with questions?

You can call Your Legacy Federal Credit Union at 419-448-0191 or visit the branch at 25 Shaffer Park Drive, Tiffin, Ohio 44883 for assistance.