1. What is Escrow Aggregate Adjustment?

The Escrow Aggregate Adjustment is a calculation used in mortgage lending to determine the difference between the required escrow cushion and the actual escrow account balance. This adjustment ensures proper funding of escrow accounts for property taxes and insurance.

2. How Does the Calculator Work?

The calculator uses the escrow adjustment formula:

Where:

• \( Cushion \) — Required escrow cushion amount
• \( Balance \) — Current escrow account balance

Explanation: The formula calculates the difference between the required minimum cushion and the actual balance to determine if additional funds are needed or if there's an excess in the account.

3. Importance of Escrow Adjustment Calculation

Details: Accurate escrow adjustment calculation is crucial for maintaining proper escrow account funding, ensuring timely payment of property taxes and insurance, and complying with mortgage lending regulations.

4. Using the Calculator

Tips: Enter the required cushion amount and current balance in currency units. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is an escrow cushion?
A: An escrow cushion is the minimum balance that must be maintained in an escrow account to cover potential increases in tax or insurance payments.

Q2: When is escrow aggregate adjustment typically calculated?
A: This adjustment is typically calculated during mortgage origination, refinancing, or during annual escrow account analysis.

Q3: What does a positive adjustment indicate?
A: A positive adjustment indicates that additional funds need to be added to the escrow account to meet the cushion requirement.

Q4: What does a negative adjustment indicate?
A: A negative adjustment indicates that there is excess funds in the escrow account beyond the required cushion.

Q5: Are there legal limits on escrow cushions?
A: Yes, federal regulations typically limit escrow cushions to a maximum of two months' worth of escrow payments.