Principal & Interest Payment

Applied to your loan. Does not change if you have a fixed-rate loan.

Escrow Payment

Portion of your payment set aside to pay annual tax and insurance obligations. Typically changes annually

Determined by dividing estimated annual tax and insurance obligations by the number of scheduled mortgage payments over the coming year.

Funds may be added to maintain the required minimum balance in your escrow account (typically 2 months escrow payments).

Ensures your escrow payment is sufficient to cover your tax and insurance obligations.

Compares escrow payments collected over the last 12 months to your actual tax and insurance expenses.

Typically identifies a shortage, to be paid back, or a surplus, which is refunded or credited to your account.