Every time you pay your mortgage, a little bit of that money goes into a dividend-earning escrow account. LGFCU uses that account to pay property tax and homeowner's insurance. This makes your budgeting a breeze and lets you earn dividends at the same time.
How escrow accounts work
LGFCU estimates the amount due for your annual property tax and homeowner’s insurance premium, then divides that into 12 payments per year. These funds are placed in the escrow account where the funds generate dividends at the Share Account rate. The cost of those payments is included in your mortgage payment, so when you make your payment in full you’re paying interest, principal balance and escrow. When your annual taxes and insurance are due, LGFCU pays those fees on your behalf from your escrow account.
Annual escrow analysis
Every year on the anniversary date of your mortgage, you’ll get a statement that shows how much you’ve saved in your escrow account. The statement will also show if you owe more or less on your taxes and insurance than the amount estimated the year prior. The escrow portion of your payment is subject to change based on the amount of your annual insurance premiums and property taxes.