In this article, we will discuss when and how you may receive an escrow refund from your previous lender, when it should be transferred to the new lender, and how you can make sure that your money is returned to you.
When a mortgage loan is sold to a different lender, it is required by law that the new lender contact you directly to explain the escrow refund process. Your closing paperwork should include a statement assuring you that you will receive an escrow refund from the previous lender if it applies to your situation. By law, the amount must be paid within 30 days of your loan being sold. This is designed to ensure that you receive the full benefit of the escrow refund without delays.
An escrow refund is calculated based on the amount of escrow funds that you had in a reserve account with the original lender, minus any fees or payments due. The escrow refund is an adjustment that is made to offset the difference between your old and new monthly mortgage payments. It is important to understand that the escrow refund does not represent cash, but rather a credit or reduction of future monthly payments.
In order for your escrow refund to be transferred to the new lender, you must provide your previous lender with both the name and address of the new lender. This will enable them to send the refund check directly to the new lender. Your previous lender may also contact you directly to arrange for the escrow refund to be sent. If you are unable to provide the information about the new lender, your escrow refund will be mailed directly to you.
It is important to keep an eye on the escrow refund process after you have refinanced your mortgage. If it has been more than 30 days since you refinanced, you should contact your previous lender to make sure that the transfer of funds has been made. You may also need to contact the new lender to ensure that the escrow refund has been applied to your new loan.
In summary, refinancing your mortgage is an important decision and one that requires careful consideration. When refinancing, you may be entitled to an escrow refund. This refund must be transferred to the new lender within 30 days of the loan being sold, and you must provide the necessary information to your previous lender in order for them to do so. It is also important to monitor the refund process to ensure that you are receiving the full benefit of the escrow refund.
This article was contributed on Nov 17, 2023