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Escrow and PITI Explained
Most lenders collect property taxes and insurance along with your loan payment and hold them in an escrow account, then pay those bills for you.
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What is escrow
An escrow account spreads your annual property tax and homeowners insurance into monthly amounts added to your payment. The servicer pays the bills when they come due, so you are not hit with large lump sums.
Why your payment changes
Your principal and interest stay fixed on a fixed-rate loan, but taxes and insurance change over time. When they rise, your escrow portion and total payment rise too, even though your rate did not change.
Escrow analysis
Once a year the servicer reviews the account. If it collected too little, your payment goes up and there may be a shortage to cover; if too much, you get a refund.
Put it into numbers. The calculator estimates your payment and compares every loan type.
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Frequently asked questions
What is an escrow account?
An account your servicer uses to collect and pay your property taxes and homeowners insurance along with your loan payment.
Why did my mortgage payment go up?
Usually because property taxes or insurance rose, which increases the escrow portion, even on a fixed-rate loan.
Is escrow required?
Often yes with low down payments, though some loans allow you to waive it and pay taxes and insurance yourself.
Important disclosures. LoanFitCalc is a free educational tool that provides estimates only. It is not a loan, a loan approval, a commitment to lend, a rate lock, or an offer to make a loan, and it does not provide financial, legal, or tax advice or recommend a specific loan for you. Mortgage insurance rates, funding and guarantee fees, loan limits, taxes, and insurance figures are typical published values used for estimation and are subject to change. Program eligibility rules are summarized and simplified. Actual terms depend on your full application, credit, property, and lender underwriting. Consult a licensed mortgage loan originator before making any decision. LoanFitCalc is an independent educational website and is not a lender. ⌂ Equal Housing Opportunity
