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Escrow Shortage
January 19, 2023
When your escrow amount goes below a certain threshold, this is an escrow shortfall. We'll get into how that level is defined later, but for now, know that you have a shortage whenever the minimal balance isn't met. In addition to scarcity, there is something known as an escrow deficiency. This occurs when you do not have enough funds in your escrow account to cover all of your escrow things, such as taxes and insurance. In that situation, you'll have a negative balance in your account, and your mortgage lender will advance the difference between what's in your account and what's owed. You'll have to pay this back when your subsequent escrow analysis is performed.
Related Topics
When Is the First Mortgage Payment Due?
What Does Foreclosure Mean?
What Is a HELOC Loan?
Loan Default
Financial Considerations (For First-Time Home Buyers)
Mortgage Loan Types
Payment and Debt Ratios
Home Value: Appraised, Estimated, Actual