Do I get my escrow money back when I refinance?
When you refinance your mortgage, you may wonder about what happens to your escrow account. The answer to the question “Do I get my escrow money back when I refinance?” is:
Yes, you will typically receive a refund of any remaining funds in your escrow account after you refinance your mortgage.
When you refinance, your old loan is paid off and a new loan is created. As part of this process, your lender will close out your old escrow account and establish a new one. Any remaining funds from your old escrow account will be refunded to you.
Refinancing can be a great way to lower your monthly mortgage payments, take advantage of lower interest rates, or shorten the term of your loan. However, it’s important to understand how the refinance process impacts your escrow account. Here are some common questions related to escrow accounts and refinancing:
1. What is an escrow account?
An escrow account is a separate account held by your lender to pay property-related expenses, such as property taxes and homeowners insurance, on your behalf.
2. How does an escrow account work?
When you make your mortgage payment, a portion of it will go into your escrow account to cover expenses like property taxes and insurance. Your lender will then use the funds in your escrow account to pay these bills on your behalf.
3. Why do lenders require escrow accounts?
Lenders require escrow accounts to ensure that property-related expenses are paid on time, which helps protect their investment in your property.
4. Can I choose not to have an escrow account?
In some cases, you may be able to opt out of having an escrow account, but this typically requires a larger down payment or a higher credit score.
5. When do I get my escrow refund after refinancing?
You should receive your escrow refund within 30 days of closing on your refinance.
6. How is the amount of my escrow refund calculated?
The amount of your escrow refund is typically based on the balance in your escrow account at the time of refinancing.
7. Can I use my escrow refund to cover closing costs?
Yes, you can use your escrow refund to help cover the closing costs of your refinance.
8. What happens to my escrow when I refinance with the same lender?
If you refinance with the same lender, your escrow account will typically be transferred to the new loan, and any remaining funds will be applied to your new escrow account.
9. What happens to my escrow when I refinance with a new lender?
If you refinance with a new lender, your old escrow account will be closed out, and any remaining funds will be refunded to you.
10. Can I request a waiver of escrow requirements when I refinance?
Some lenders may allow you to waive escrow requirements when you refinance, but this could result in a higher interest rate or additional fees.
11. What should I do if I don’t receive my escrow refund after refinancing?
If you do not receive your escrow refund within 30 days of closing on your refinance, you should contact your lender to inquire about the status of your refund.
12. Can I roll my escrow refund into my new loan when I refinance?
Some lenders may allow you to roll your escrow refund into your new loan when you refinance, but this could increase your loan amount and monthly payments.