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Handling Escrow Accounts

Ryan Hofrichter

Hello, I recently received an escrow review statement in connection with my home mortgage. Historically I've not had a separate account set up in quicken to track the escrow account. The review statement states that there is a projected shortage for 2021 and asks that I pay this amount. How would I categorize this payment? Is it best to set up a separate account for the escrow so that it is just marked as a transfer?

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Accepted answers

Frankx

Hi @Ryan Hofrichter,

I would suggest that you establish a "Mortgage Escrow" account in Quicken because it will allow you to track the various transactions - not only the payments for taxes and insurance, but also the interest earned on the account. It is an extra step, but one that I think is worthwhile.

Good luck!

Frankx

All comments

Frankx

NotACPA

Note that such Escrow account is an ASSET, probably a non-downloadable banking account of some kind.

When your month Mtg payment transfers funds to the Escrow, that's a simple deposit into the Escrow. When your Insurance or taxes are taken out of Escrow, THAT's the expense.

JackJr

Escrow is set up as an asset. Cannot figure out how to "reconcile" the transactions and balances. Is there a way? Is there a better category Type for this?

Tom Young

@JackJr

Asset Accounts in Quicken don't have a "reconcile" function, but that shouldn't be a problem since you can still reconcile the Account, manually.

The sevicer is holding your escrow account dollars on its balance sheet, in the same fashion that any financial institution might hold a savings or a checking account, and is required to provide you the information as to balances and transactions, in a similar fashion. As transactions (your deposits into the account and payments for taxes and/or insurance) get reported you put an "R" in the "Clr" column in Quicken, assuming that Quicken and the servicer report the same transaction amount. The running balance in Quicken and the balance in the account per the lender should always agree.

UKR

Asset Accounts in Quicken don't have a "reconcile" function, but that shouldn't be a problem since you can still reconcile the Account, manually.

To be able to have the "Reconcile" function available, I have defined my Escrow account in Quicken as Account Type = Checking.
To show this account among the Property & Debt accounts I have also set it to Account Intent = Asset.

If you have created your Account Type = Asset account already, you cannot change the Type of an existing account. But you can do this:

Create a new offline checking account and remember to set Account Intent to Asset.
In the original Type = Asset account register unreconcile all transactions,
block-select all transactions except the Opening Balance transaction,
right-click one of the selected transactions and choose "Move transactions"
select the new checking account as the destination of the move.
Make sure the Opening Balance transaction in the new checking account is correct.
Edit the monthly payment transaction's Scheduled Reminder to point the Escrow Split transfer to the new checking account
If you have created scheduled reminders to record the annual payments of tax or insurance change them to point to the new checking account
Delete the original Escrow account

If the mortgage company tells you about overages/underages in your escrow account and requires a change to the escrow amount of your monthly payment, change the Scheduled Reminder to adjust the total amount and the amount of escrow in the reminder's Split dialog.