Money Smarts Blog
Escrow, Taxes, and Insurance… Oh My!
Jan 12, 2026 || 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 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 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.
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 if your mortgage payment stays the same, your escrow portion can change from year to year. That’s because escrow is tied to real-world costs like property taxes and insurance, which can fluctuate. Here’s why you might see a change:
- Property taxes go up or down. Your property taxes are set by your local county, not by IHMVCU. They’re based on things like your home’s assessed value, local tax rates, and any new levies or special assessments. When the county updates these, your escrow account adjusts to cover the new amount. Even small changes in taxes can affect your monthly payment.
- Homeowners insurance premiums change. If your insurance company raises rates, you switch providers, or update your coverage, your escrow balance will be recalculated to make sure enough is saved to pay your premiums.
- Escrow shortages or surpluses. Each year, we review your escrow account in what’s called an escrow analysis. If there wasn’t enough in your account to cover last year’s bills, you’ll see a shortage and your monthly payment may go up. If there was extra, you could get a small refund or see your payment go down.
- Timing of payments. Sometimes the due dates of taxes or insurance bills can change. If a payment is delayed or higher than expected, your escrow is adjusted to make sure future bills are covered.
Keeping in mind that property taxes are controlled by your county can help explain why your escrow changes even if your mortgage itself doesn’t. Checking your tax assessments and insurance premiums each year can help you anticipate changes and avoid surprises.
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 Servicing 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. Our team loves 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!
Jan 12, 2026 || 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 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 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.
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 if your mortgage payment stays the same, your escrow portion can change from year to year. That’s because escrow is tied to real-world costs like property taxes and insurance, which can fluctuate. Here’s why you might see a change:
- Property taxes go up or down. Your property taxes are set by your local county, not by IHMVCU. They’re based on things like your home’s assessed value, local tax rates, and any new levies or special assessments. When the county updates these, your escrow account adjusts to cover the new amount. Even small changes in taxes can affect your monthly payment.
- Homeowners insurance premiums change. If your insurance company raises rates, you switch providers, or update your coverage, your escrow balance will be recalculated to make sure enough is saved to pay your premiums.
- Escrow shortages or surpluses. Each year, we review your escrow account in what’s called an escrow analysis. If there wasn’t enough in your account to cover last year’s bills, you’ll see a shortage and your monthly payment may go up. If there was extra, you could get a small refund or see your payment go down.
- Timing of payments. Sometimes the due dates of taxes or insurance bills can change. If a payment is delayed or higher than expected, your escrow is adjusted to make sure future bills are covered.
Keeping in mind that property taxes are controlled by your county can help explain why your escrow changes even if your mortgage itself doesn’t. Checking your tax assessments and insurance premiums each year can help you anticipate changes and avoid surprises.
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 Servicing 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. Our team loves 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.
