Your escrow account and insurance refunds after closing

Frequently Asked Questions

Do I get my escrow balance back when I sell?

Yes, but from the lender after closing rather than at the closing table. The closing agent pays off the loan, and the lender separately reconciles and returns the escrow balance. It typically arrives weeks later rather than days.

Why is it not on my settlement statement?

Because it is a separate account settled by the lender after the payoff clears, on the lender's own timetable. Sellers who assume the closing wire is the whole picture are the ones who forget to chase it, so note the balance from the payoff statement.

Will my insurance refund automatically?

Usually not. Cancellation is generally your responsibility, and insurers typically refund from the cancellation date rather than the closing date, so cancelling promptly after closing matters. Do not cancel before closing, because coverage must remain until transfer.

When should I cancel my homeowners policy?

After closing, not before, because the property must remain insured until it transfers. Then do it promptly. Separate flood and wind policies need cancelling separately, and each may produce its own refund of unused premium.

What if my mortgage payment comes out after closing?

It is generally refunded, though it takes time. Cancelling the automatic payment shortly before closing avoids the round trip, as long as you do not cancel so early that a payment is missed beforehand. Ask the lender how they handle it, since practice varies.

What else do I need to cancel myself?

Utilities with final readings, association payment arrangements including automatic ones, alarm monitoring, and pool, lawn or similar recurring services. Each is small and each keeps billing until somebody stops it.

How long should I wait before chasing?

A few weeks is reasonable, a few days usually is not. If nothing has arrived, contact the lender's payoff or escrow department rather than general customer service, with the loan number, closing date and payoff statement to hand.

Can I count the refund toward my next purchase?

No. Your down payment has to come from the closing wire rather than from money still sitting with your lender. Treat refunds as a later top-up, which matters most if you are buying on the same day or shortly afterwards.

What documents should I keep?

The final settlement statement, the payoff statement showing the escrow balance, insurance cancellation and refund details, records of improvements made during ownership, and your original purchase closing statement. Your accountant will want most of these.

Who do I give my forwarding address to?

The lender, the insurer, the association and the closing agent, because refunds are often mailed rather than wired. Set up mail forwarding as well, since refund cheques and tax documents frequently arrive after you have moved.

Is the escrow refund taxable?

It is a return of your own money rather than income, so it is not generally treated as a taxable receipt. Your accountant will confirm how it sits alongside the rest of the transaction, particularly where property tax deductions were claimed during ownership.

What happens to my final water and utility bills?

Final readings are normally taken around closing and the closing agent may handle some of them, though practice varies by provider. Anything not settled at closing is billed to you afterwards, so confirm which accounts were closed rather than assuming all of them were.

Do I get my association dues back if I paid ahead?

Yes, through the proration rather than as a separate refund. Where dues were paid in advance, the proration credits you on the settlement statement for the portion covering the period after closing. The estoppel certificate establishes what was paid.

Should I keep paying insurance until the refund arrives?

Coverage must stay in place until the property transfers, and then you cancel. The refund follows cancellation rather than closing, and insurers typically calculate from the cancellation date, so a delay in cancelling costs you part of the refund.