Money Smarts Blog
Escrow, Taxes, and Insurance… Oh My!
Dec 22, 2025 || By Alicia P., Director, Loan Operations
One of the most common questions I get from homeowners is, “Why did my mortgage payment change?” The answer often comes down to something called escrow.
Let’s break it down so it actually makes sense.
What Escrow Is (and Why You Have It)
Your escrow account is like a built-in savings account that’s part of your mortgage. Each month, a portion of your payment goes toward your loan, and another portion goes into your escrow account. That money is set aside to pay your property taxes and homeowners insurance when they come due.
Think of escrow as your mortgage’s way of helping you plan ahead. Instead of getting a big bill once or twice a year, you pay a little each month so you don’t have to scramble later.
How It Works
Here’s what happens behind the scenes:
- You make your monthly mortgage payment.
- Part of that payment goes into your escrow account.
- When your property taxes or homeowners insurance are due, IHMVCU uses the money in escrow to pay them for you.
It’s a system designed to make your life easier and keep your home protected.
How Homeowners Insurance Fits In
Your homeowners insurance protects your property in case of damage or loss, and it’s one of the main items paid from your escrow account.
If your insurance premium changes, say you switch companies, update your coverage, or your provider adjusts rates, your escrow account adjusts too. When your insurance costs go up, you’ll likely see your escrow portion (and your total monthly payment) increase. If your premium goes down, you could see your payment decrease after your next escrow analysis.
Why Your Escrow Payment Can Change
Even though your mortgage itself might be fixed, your escrow amount isn’t. It’s based on real-world costs that can go up or down each year.
Here are the most common reasons escrow changes:
- Property taxes increase or decrease. Local tax rates or property values can change over time, and that directly affects your bill.
- Homeowners insurance premiums change. If your insurer raises rates or you adjust your coverage, your escrow balance will be recalculated.
- Escrow shortages or surpluses. Each year, IHMVCU reviews your escrow account in an escrow analysis. If there wasn’t enough in your account to cover last year’s payments, you’ll have a shortage. If there was extra, you might get a small refund or see your monthly payment go down.
What to Do if Your Escrow Changes
When your payment changes, don’t panic! You’ll get a detailed escrow analysis statement that shows exactly how the new amount was calculated.
If your escrow payment goes up, review your property tax bill and insurance policy to see where the increase came from. Sometimes a quick call to your insurance agent or county assessor can clarify the change.
If your payment goes down, that’s good news! It usually means lower taxes or insurance costs.
A Little Advice from the Loan Operations Desk
If you ever make changes to your homeowners insurance, like switching providers or adjusting your policy, let us know right away. That way, we can make sure your escrow account stays accurate and your home remains fully covered.
And if you’re ever unsure about your escrow statement or why your payment changed, reach out. My team and I love helping members understand what’s happening behind the numbers.
At IHMVCU, we’re here to make homeownership easier, one explanation (and one escrow payment) at a time.
Escrow, Taxes, and Insurance… Oh My!
Dec 22, 2025 || By Alicia P., Director, Loan Operations
One of the most common questions I get from homeowners is, “Why did my mortgage payment change?” The answer often comes down to something called escrow.
Let’s break it down so it actually makes sense.
What Escrow Is (and Why You Have It)
Your escrow account is like a built-in savings account that’s part of your mortgage. Each month, a portion of your payment goes toward your loan, and another portion goes into your escrow account. That money is set aside to pay your property taxes and homeowners insurance when they come due.
Think of escrow as your mortgage’s way of helping you plan ahead. Instead of getting a big bill once or twice a year, you pay a little each month so you don’t have to scramble later.
How It Works
Here’s what happens behind the scenes:
- You make your monthly mortgage payment.
- Part of that payment goes into your escrow account.
- When your property taxes or homeowners insurance are due, IHMVCU uses the money in escrow to pay them for you.
It’s a system designed to make your life easier and keep your home protected.
How Homeowners Insurance Fits In
Your homeowners insurance protects your property in case of damage or loss, and it’s one of the main items paid from your escrow account.
If your insurance premium changes, say you switch companies, update your coverage, or your provider adjusts rates, your escrow account adjusts too. When your insurance costs go up, you’ll likely see your escrow portion (and your total monthly payment) increase. If your premium goes down, you could see your payment decrease after your next escrow analysis.
Why Your Escrow Payment Can Change
Even though your mortgage itself might be fixed, your escrow amount isn’t. It’s based on real-world costs that can go up or down each year.
Here are the most common reasons escrow changes:
- Property taxes increase or decrease. Local tax rates or property values can change over time, and that directly affects your bill.
- Homeowners insurance premiums change. If your insurer raises rates or you adjust your coverage, your escrow balance will be recalculated.
- Escrow shortages or surpluses. Each year, IHMVCU reviews your escrow account in an escrow analysis. If there wasn’t enough in your account to cover last year’s payments, you’ll have a shortage. If there was extra, you might get a small refund or see your monthly payment go down.
What to Do if Your Escrow Changes
When your payment changes, don’t panic! You’ll get a detailed escrow analysis statement that shows exactly how the new amount was calculated.
If your escrow payment goes up, review your property tax bill and insurance policy to see where the increase came from. Sometimes a quick call to your insurance agent or county assessor can clarify the change.
If your payment goes down, that’s good news! It usually means lower taxes or insurance costs.
A Little Advice from the Loan Operations Desk
If you ever make changes to your homeowners insurance, like switching providers or adjusting your policy, let us know right away. That way, we can make sure your escrow account stays accurate and your home remains fully covered.
And if you’re ever unsure about your escrow statement or why your payment changed, reach out. My team and I love helping members understand what’s happening behind the numbers.
At IHMVCU, we’re here to make homeownership easier, one explanation (and one escrow payment) at a time.
