BEHIND THE NUMBERS
How this calculation works
Worked example
Tax of $1,200 in month 6 and insurance of $1,200 in month 12 require $200 monthly deposits. With a two-month cushion, separate openings total $1,000 while the combined opening is $400. The aggregate adjustment is −$600.
Example result: -US$600.00
Why timing changes the deposit
Two accounts can have the same annual taxes and insurance but need different opening cash. A large early bill leaves less time to collect monthly deposits. The trial balance makes that timing visible and prevents annual totals from hiding a temporary shortfall.
Read the adjustment with its sign
The aggregate adjustment shown here compares combined funding with hypothetical separate-item funding. A negative adjustment reduces the initial deposit. It is not a fee or an automatic refund of money already paid; reconcile it with the lender’s initial escrow statement and the precise disbursement dates.
Assumptions and rounding
- All entered bills are paid from escrow within the 12-month computation year.
- Fractional cents are retained internally and displayed to cents. The federal maximum cushion is two monthly payments.
Questions about this calculator
Are two cushion months compulsory?
No. Two is a federal maximum for this model, not a mandatory amount. The lender may use less, and another applicable rule may impose a lower limit.
Can I list quarterly taxes?
Yes. Use four rows with the same item name and the actual payment month and amount on each row.
Should prepaid insurance paid outside escrow be listed?
No. Only bills paid from this modelled account during its computation year belong in the schedule.