Initial Escrow Account Disclosure Statement

Initial Escrow Account Disclosure Statement

An Initial Escrow Account Disclosure Statement is a document required by the Real Estate Settlement Procedures Act (RESPA) that provides borrowers with essential information about the escrow account associated with their mortgage loan. This statement is typically provided at the time of closing and outlines the estimated monthly payments that will be deposited into the escrow account, along with the purpose of these payments.

The statement includes details such as the total estimated annual property taxes, homeowner’s insurance premiums, and any other fees that will be covered by the escrow account. It also specifies the initial deposit required to establish the escrow account, any anticipated increases in costs, and how the lender will handle surplus funds or shortages in the account throughout the year.

For example, if a borrower has a mortgage that requires an escrow account for property taxes and insurance, the Initial Escrow Account Disclosure Statement will show an estimated monthly payment amount—let’s say $300. This amount would be broken down into portions allocated for property taxes ($200) and homeowners insurance ($100). Additionally, if the lender anticipates that property taxes will increase in the next year, this forecast may also be noted in the statement, helping the borrower to understand future payment obligations.