How do escrows work at closing?
If you are escrowing for taxes and/or insurance, the lender will collect taxes up through the month of your closing plus three additional months’ reserves. For example, if you are closing in May, the lender will collect a total of eight months’ escrows. Keep in mind that on purchases you will receive a tax credit from the seller for the taxes on the property from the beginning of the year through closing. And, if you’re refinancing, you can transfer escrow accounts if you are using the same lender, or you will receive a refund from the lender currently holding your escrows – either it will be credited on the payoff or your will receive a check from your original lender after closing.
