Escrow Shortage Calculator

Formula

The formula to calculate the escrow shortage is:

\[ \text{ES} = \frac{\text{TA} - \text{EA}}{\text{M}} \]

Where:

$ \text{ES} $ is the escrow shortage ($)
$ \text{TA} $ is the total annual escrow amount required ($)
$ \text{EA} $ is the existing amount in the escrow account ($)
$ \text{M} $ is the number of months remaining in the year

What is an Escrow Shortage?

An escrow shortage occurs when there are insufficient funds in your escrow account to cover the projected annual amount for your property taxes and/or insurance premiums. This can happen if the taxes or insurance premiums for the property increase unexpectedly throughout the year, causing the amount paid out by the escrow account to be more than what was initially estimated and collected by the lender.

Example Calculation

Let's consider an example:

Total Annual Escrow Amount Required: $12,000
Existing Amount in Escrow Account: $3,000
Number of Months Remaining in the Year: 6

Using the formula to calculate the escrow shortage:

\[ \text{ES} = \frac{12000 - 3000}{6} = \frac{9000}{6} = 1500 \text{ dollars/month} \]

This demonstrates that with a total annual escrow amount required of $12,000, an existing amount in the escrow account of $3,000, and 6 months remaining in the year, the escrow shortage is $1,500 per month. ✅