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Loan Escrow

This article explains how to handle loans with escrow for Insurance, Property Tax, and Private Mortgage Insurance (PMI)

1. Overview of How Property Depreciation work for Real Estate Investors

When you have a mortgage, your lender often sets up an escrow account to manage recurring property-related expenses. Each month, part of your mortgage payment is set aside into this account to cover:

  • Property Taxes: The lender pays your annual or semi-annual property tax bill directly from the escrow account when it’s due.

  • Homeowner’s Insurance: Your annual insurance premium is also paid automatically by the lender from the escrow account.

  • PMI (Private Mortgage Insurance): If your loan requires PMI, the monthly PMI amount is collected as part of your escrow payment.

2. Adjusting Loans, Insurance, and Property Tax to loan escros in Property Tools

When you add your Loan in Property Tools, it will be added with out any escrow amounts.  Once the Loan is in the system, you can navigate to Loans in the sidebar to see your list of Loans.  There is a button on each line to add Escrow where you can add the monthly escrow amount for each of Insurance, Property Tax, and PMI.  This will add those amounts to the amortization and payment schedules and Financial Report entries.

Now, when you add your Insurance and Property Tax objects, you need to navigate to those pages and click the escrow button in corresponding policy or loan row of the table.   This way you can still maintain your Loan and Property Tax objects and reminders in Property Tools, but the financial entries from those objects will be removed since they are now made through the Loan escrow entries.

3. Viewing Depreciation

    Bank statements usually show only the total mortgage payment, not the individual amounts for taxes, insurance, or PMI. To see the breakdown:

    • Check your monthly mortgage statement — most lenders list how much of your payment goes to principal, interest, and escrow.

    • Log in to your lender’s online portal — there’s often an escrow or payment breakdown section.

    • Review your annual escrow statement — lenders are required to send this each year, showing deposits, disbursements, and any changes in escrow balance.