Jonesboro, AR — (Contributed) — July 7, 2025 — Homeowners with mortgages may be familiar with their annual escrow account, but many may find it confusing, especially first-time homebuyers.

Arvest Bank is offering tips to help homeowners better understand their escrow accounts and how an escrow analysis might impact their monthly payments.

According to a recent Annual Escrow Awareness survey conducted by tax and flood services provider LERETA, 60% of mortgage holders said they don’t fully understand their escrow accounts, and about half surveyed said they were surprised to see increases.

Escrow accounts help homeowners manage mortgage-related expenses by allowing lenders to collect funds from the monthly mortgage payment and hold them in an escrow account to pay property taxes, homeowners’ insurance and other required items on the homeowner’s behalf.

“Having a basic understanding of escrow accounts and the annual escrow analysis can help homeowners be better prepared for possible changes in their monthly mortgage payments,” said Dana Hedger, mortgage lender with Arvest Mortgage in Jonesboro. “It can be confusing at first, but it can provide valuable insights and opportunities to manage monthly expenses.”

Hedger offers tips to help homeowners understand their statements and what they can do to help manage their monthly payments.

About escrow accounts and analysis

Homeowners pay into their escrow account as part of their monthly mortgage payment. The escrow account is then used by the lender to pay annual taxes and insurance on their behalf.

At least once a year, the lender reviews the escrow account to determine if there are sufficient funds to pay the required expenses and if changes in monthly payments are needed. The results are included in an escrow analysis statement, which lenders are required to send within 30 days of completing their review of the escrow account.

How to read your escrow analysis

Your escrow analysis statement should include:

  • Monthly payments you made to your escrow account in the last 12 months
  • Actual amount paid toward your taxes and insurance items
  • Projected payments toward your taxes and insurance items in the next 12 months
  • Amount of any shortage or surplus in your required minimum monthly escrow account balance to pay the items in the next 12 months
  • Any changes to your monthly payment amount

If the actual amount or projected amount is higher than the minimum account balance, this will reflect an increase in monthly payments. If the actual or projected amounts are lower, the analysis statement will show the account has a surplus.

“One of the most frequent questions we get from customers is about changes to their monthly payments,” Hedger said. “The most common reasons for those include changes in property tax bills and changes in your homeowners, mortgage or other insurance, including changes to your premium due date.”

Ways to manage monthly mortgage payments

Insurance and property tax increases can be burdensome for homeowners living on a tight budget. According to the LERETA survey, 44% of respondents said they would experience hardship if their mortgage payments increased.

Check with your insurance agent about what you can do to keep your insurance rates affordable. If you’re considering a change that could impact your premiums, we recommend doing so before your escrow analysis month.