How does a servicer calculate an escrow payment after closing (analysis timing, cushions)?

How do servicers calculate my escrow payments?

You want to understand how your mortgage servicer calculates escrow payments and when those calculations happen after you close on your home.

Servicers typically perform an initial escrow analysis within 60 days of closing to set up your monthly payment. They estimate annual costs for property taxes and homeowners insurance, then divide by 12 to get your monthly escrow portion. The servicer also adds a cushion—commonly two months of escrow payments—to cover timing differences between when bills arrive and when you make payments.

After the initial setup, servicers conduct annual escrow analyses to compare actual costs with estimates. If property taxes or insurance premiums change, your monthly payment adjusts accordingly. The analysis shows any shortage (you owe more) or surplus (you get a refund) based on the previous year's activity.

You can check your escrow account activity through monthly statements or your servicer's online portal. Look for the breakdown of taxes and insurance collected versus payments made to local agencies and insurance companies. If the projected costs seem different from what you expected, contact your servicer with documentation like tax bills or insurance renewal notices. They can walk you through the calculation and explain any adjustments to your monthly payment.