Escrow refunds after refinancing

Most mortgages have an escrow account. Part of each monthly payment goes into it, and your servicer uses it to pay your property taxes and homeowners insurance when they're due.

When you refinance, your new loan usually needs its own escrow account. Your old servicer still holds the balance in your old account until the old loan is paid off. For a short time, you may have money in both.

After your old loan is paid off, your old servicer closes the escrow account and refunds what's left. This often takes a few weeks, commonly about 30 days. It may come as a check in the mail or a direct deposit, depending on the servicer.

Make sure your old servicer has your current mailing address, especially if you've moved.

Your new lender collects enough at closing to start your new escrow account, so it's ready when the next tax or insurance bill is due. The amount depends on when those bills come up and how much they are.

Your old refund often comes close to covering the new deposit. It just arrives a few weeks after you've already paid in.

• Closing: your new escrow account is funded
• Payoff: your new loan pays off the old one
• Within a few weeks, often about 30 days: your old servicer closes your old escrow account and refunds the balance
• Next tax or insurance bill: paid from your new escrow account

It's often equal to a few months of taxes and insurance, but it depends on where you are in the billing cycle. If a large tax bill was just paid, the balance may be small. If one was about to be paid, it may be larger.

Hypothetical example: if $500 a month goes into escrow, a refund of two to six months' worth would be $1,000 to $3,000.

With CapCenter's ZERO Closing Costs, CapCenter pays for or waives the closing costs typically required to process the loan (restrictions apply). Escrow deposits and prepaid interest aren't covered, because they aren't fees. They're your money, set aside for your own bills. Your Loan Estimate and Closing Disclosure show these amounts separately.