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What Happens to Escrow When You Pay Off a Mortgage?

November 24, 2022
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Escrow and Mortgages –

Have you ever wondered what happens to the money you’ve been paying into escrow each month after you’ve paid off your mortgage? If so, you’re not alone. Mortgage escrow is one of the biggest mysteries for first-time home-buyers and even some experienced homeowners. This post will answer some of the most frequently asked questions about mortgage escrow and what happens when you pay off your home loan.

What Happens to the Money in Your Escrow Account?

When you pay off your mortgage, the money in your escrow account doesn’t just disappear. The escrow company will refund you any money left over in the account within 30 days.

For example, let’s say you have $2,000 in your escrow account when you pay off your mortgage. The escrow company will send you a check for $2,000 within 30 days of receiving everything from your lender.

Paying Off Your Mortgage vs. Refinancing It

If you have an adjustable-rate mortgage, you can lower your monthly payments by refinancing it when interest rates go down. You shouldn’t do this if you have a fixed-rate mortgage that has a lower interest rate than the current market interest rates.

Another reason people refinance their mortgages is that they want to get cash out of their equity. Equity is the portion of your home that you own outright—it’s the market value of your home minus the amount of money you still owe on your mortgage.

Some people refinance their mortgages and take out cash against their equity for home improvements or debt consolidation.


So, what happens to an escrow account when you pay off a mortgage? The money doesn’t just disappear—the escrow company will refund any leftover funds to you within 30 days. And if you have a fixed-rate mortgage, paying it off early can save you money on interest payments in the long run.

Of course, there are other reasons why people refinance their mortgages (like taking cash out of their equity), but that’s a topic for another day! If you’re considering refinancing your mortgage, talk to a financial advisor first to see if it’s the right move for you. Contact us to learn more about our escrow services.

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