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    Oneill474's Avatar
    Oneill474 Posts: 427, Reputation: 2
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    #1

    Oct 9, 2007, 11:24 AM
    Escrow reserve formula?
    Most mortgage company required you to keep a mortgage reserve in your escrow account.

    But how is the amount determined. Is it a percentage of the mortgage, is it a %
    Of the your monthly payment, or what??
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Oct 9, 2007, 12:27 PM
    I went through this several years ago. The formula is a bit complex, but it boils down to this. They take the expenses that they paid out the previous year and divide that by 12. Then then check to make sure that the balance will never go below 2 months payment. They then jack up the payment to ensure that the 2 month minimum is maintained.

    One of the nice things about my current mortgage holder is that they let you manage the escrow myself. Because I can a) keep the money in an interest bearing account and b) don't have to maintain an artificial minimum I can keep my payments lower.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
     
    #3

    Oct 16, 2007, 05:51 AM
    Please do not ask questions via PM and/or e-mail. They should only be used for correspondence of a personal nature.

    You deposit the funds in an account that will be liquid yet give the highest interest rate.

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