Problems and activities

Question

Annie’s mortgage statement shows a total payment of $699.12, with $604.60 paid toward principle and interest and $94.52 paid for taxes and insurance. Taxes and insurance for 3 months were collected at closing. Now after 6 months of payments, she is curious about the total in her escrow account. Calculate the amount for her, and explain the account.

Answer 1

The amount going into Annie's escrow account each month is the portion for taxes and insurance:

$94.52\$94.52

At closing, 3 months of taxes and insurance were collected:

3($94.52)=$283.563(\$94.52)=\$283.56

She has now made 6 monthly payments:

6($94.52)=$567.126(\$94.52)=\$567.12

Add these together:

$283.56+$567.12=$850.68\$283.56+\$567.12=\boxed{\$850.68}

So Annie has $850.68 in her escrow account, assuming no taxes or insurance have been paid out of it yet.

An escrow account is money the lender collects along with the mortgage payment to pay expenses such as property taxes and homeowners insurance when they become due. The $604.60 goes toward principal and interest, while the $94.52 goes into escrow.