The results of LERETA‘s second annual Escrow Awareness Survey, which was published recently, show that homeowners’ knowledge of mortgage escrow accounts and the effects of growing property taxes and homeowners insurance premiums is seriously lacking.
According to the report, just 60% of homeowners who use escrow accounts completely understand their purpose, and even among those who do, there are still misunderstandings about how these accounts work and how they affect their monthly mortgage payment.
Key Findings:
- Limited Understanding of Escrow Accounts: Only 60% of surveyed homeowners said they fully understand how an escrow account works, down from nearly 80% a year ago.
- Unawareness of Payment Variability: When comparing survey results from this year to last, fewer homeowners understand the connection between monthly mortgage payments and potential escrow adjustments due to increases in taxes and/or insurance. The survey found that 45% of respondents mistakenly believe their monthly payments cannot change if they have a fixed-rate mortgage, an increase from 36% in 2024.
- Increasing Cost of Homeownership: 68% of respondents have seen their monthly mortgage payment increase over the past two years, and of that percentage 55% were surprised, up two percentage points from the previous year. Over the past two years, 80% of respondents’ property taxes have increased; 70% have had their homeowners’ insurance increase, and of respondents who have flood insurance, 57% have seen their premiums increase. Additionally, more than a quarter (27%) of respondents have been dropped by their homeowners insurance carrier and/or been alerted that their carrier is no longer servicing their area. Almost two-thirds (65%) of respondents said it was “very” or “somewhat” difficult to find another insurance policy.
- Impact of Rising Taxes and Insurance: Almost half (49%) of respondents said they would consider selling their home and relocating if their property taxes increased significantly, and more than a quarter (27%) would consider moving if their insurance increased significantly.
- Homeowners’ Hardship Concerns: There was an increase in the number of homeowners who are concerned about making their payment if their monthly pay amount increased: almost half (44%) said it would be a hardship if their mortgage payment went up by 25%, and 50% said it would be a hardship if their monthly payment increased by only 10%.
- Borrower Access to Escrow Information: A clear majority of borrowers (81%) believe their mortgage company provides the escrow information they need via the lender’s website, and 82% said they know how to access it. Of those who had to contact their mortgage company with questions about a change in their escrow account, more than three-quarters (76%) said the lender was able to help them understand the reason for the change. However, 21% still said they would like more information specifically about their escrow account from their lender, suggesting that even though the information is available, some borrowers feel they may be missing something.
“The rising costs of homeownership, driven by escalating property taxes and insurance premiums, pose significant challenges for homeowners across the country,” said John Walsh, CEO at LERETA. “As these expenses account for an increasingly larger share of monthly mortgage payments, it’s more important than ever for homeowners to understand how escrow accounts work to avoid any confusion or financial stress. It’s clear from this survey that lenders are doing a good job of making escrow account information available to borrowers, but some homeowners still feel undereducated. At LERETA, we’re committed to providing lenders with timely and accurate escrow-related property data so they, in turn, can ensure borrowers understand any and all changes to their escrow accounts. We encourage borrowers to be diligent in understanding their unique escrow account details on an ongoing basis—and talk to their lenders if they have questions—since changes are inevitable.”
In a poll conducted in December 2024, over 1,000 homeowners with escrow accounts who had bought or refinanced a property during the previous four years were questioned how well they understood their escrow accounts and how possible hikes might impact them.
To read the full report, including more data, charts, and methodology, click here.
