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Understanding Escrow

If you are a homeowner, you may have some questions about your escrow account and annual escrow statement. For your benefit, we have addressed the most frequently asked questions about mortgage escrow accounts.

Frequently Asked Questions

How is my escrow calculated?

Prior to closing, the mortgage company will calculate how much they need to add to your mortgage payment to cover these obligations based on the information available. Available information is usually an insurance quote or premium amount for existing coverage, and tax bill information from the previous year. If there is a shortage in any year, you will be required to pay that difference. If there is a surplus, you will receive a credit or refund. Every year SunTrust will review your escrow account to recalculate the amount you pay based on the most recent billing information.

If I pay an escrow shortage, will my monthly mortgage payment still increase?

Yes, even if you pay your shortage, your mortgage payment will increase if your escrowed bills change or increase from the previous year. The escrow totals are based on the last known amount paid or the estimated amount provided at closing for new purchases and/or new construction.

Will I receive a notice or statement of these changes?

Yes. At least once a year, we perform a review of your escrow account in order to determine if the escrow portion of your monthly mortgage payment is sufficient to cover the annual requirements for your real estate taxes, hazard insurance premiums, and if applicable, your flood insurance and/or mortgage insurance premiums. We are required under the Real Estate Settlement Procedures Act (RESPA) to disclose to you in an Escrow Account Disclosure Statement the results of this review and its effect on your monthly mortgage payment. Occasionally, we may provide you with an interim statement in order to maintain compliance with RESPA, or if you request an additional review of your escrow account.

What does the Escrow Account Disclosure Statement look like?

Click here for a preview of a sample statement with guidance on how to read this statement.

What can cause my escrow (and my monthly mortgage payment) to change each year?

Increases and decreases to the escrow portion of your monthly mortgage payment are typically the result of changes in your real estate taxes and/or hazard insurance.

Click here to learn more.

What is a required escrow account minimum balance and how is it calculated?

Under Federal law, we are allowed to maintain a minimum balance or cushion of funds in your escrow account. We use this cushion as a safeguard in the event that your real estate tax and/or insurance payments increase. Unless your mortgage contract or state law specifies a lower amount, your escrow account minimum balance is equal to no more than two months escrow payments for your real estate taxes and hazard insurance. Mortgage insurance is not included in this calculation.

For more information on your escrow account, contact SunTrust Mortgage Client Services at 800.634.7928

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