Without seeing the letter no, I can't.

Are you absolutely sure it’s $600 a month and not $600 upfront if you want to pay the whole shortage for the year? Our mortgage company used to give us that option if the escrow account would be short.

I’m guessing it’s an increase in your homeowners insurance. But without seeing the statement, it’s impossible to say.

The statement said $1500 for insurance and it was previously $1100

[deleted]

They require a bit more in escrow than what you actually pay, not sure on the amount. I'd find out what the insurance and property tax bills are before calling so you'll have that info.

You can request to make those payments yourself and take them out of the equation if they are needing you to keep way more in escrow than is necessary.

Definitely call the servicer. I have had numerous instances of them screwing up my escrow account. In fact it’s happened so often I don’t use escrow anymore. The servicers I’ve had (3 total) are just too incompetent.

They likely were not taking enough out this year for the projected property taxes and insurance, so they’re increasing it to make sure the escrow account is not short again. They decide how much extra to take each month to put towards the escrow account based on projected property taxes and insurance for the next year, so they could have undershot this years by a lot, and are trying to compensate for this year and estimating another increase for next year as well. That’s a pretty hefty increase though.

Have you gotten anything from your home owners insurance about increase In premiums? Have you had any claims this year?

Welcome to the American dream home ownership. Your house payment consists of your loan, home owners insurance, and property taxes (if you have those). While the loan payment might not change the last two can and do throughout the life time of the loan. No one tells you that though. So while you are told a payment of 1200 per month next year you it can go to 1800. So let's say the government appraised your property at 50000 you bought it for 100000 that first year you pay taxes on the 50000 and bam next year you pay it on 100000, the value increased, taxes go up, and so does the insurance costs. There's you 600.00. Pretty messed up huh?

Yes because it says we can pay about $4,000 upfront and then our payment is only $250 higher a month, which still seems like a big increase.

theyre projecting a shortfall for your property taxes most likely. this was the hell I put up with with countrywide until I refinanced away from those shysters years ago. the mortgage broker I used suggested paying my taxes myself and it was a great move. the principal never changes [unless you refi lower] and the tax bill is easier for you to have certainty on because your locale will send you the bill and you will know what you owe quarterly or semi annually depending again on your locale.

So that's about $400 to insurance, an additional $200 to property taxes. Not necessarily absurd but you can still either speak to the servicer or request to make payments yourself.

No claims. This letter is saying they project $1500 for insurance but it's previously been $1100.

I could be your property value has increased and the taxes are just now adjusting.

Haha I really want to post it to get answers but sharing that much information would be unwise

The only way fix rate increase - taxes and insurance in case your state reevaluate taxes based on market price, you should expect that, compare zillow price when u bought and current

I'm considering that.

The “escrow account” that it mentioned is the thing you are using to pay your insurance and property taxes. By law, the escrow account can include an additional reserve, and basically every mortgage servicer requires the maximum allowable reserve.

> Throughout the life of an escrow account, the servicer may charge the borrower a monthly sum equal to one-twelfth (1/12) of the total annual escrow payments which the servicer reasonably anticipates paying from the account. In addition, the servicer may add an amount to maintain a cushion no greater than one-sixth (1/6) of the estimated total annual payments from the account. However, if a servicer determines through an escrow account analysis that there is a shortage or deficiency, the servicer may require the borrower to pay additional deposits to make up the shortage or eliminate the deficiency, subject to the limitations set forth in § 1024.17(f).

Periodically, the servicer will analyze the escrow account, and adjust your payments as needed to account for both the tax/insurance/etc. as well as the reserve amount.

So, if the tax/insurance payments have been going up, the reserve was drawn on to make up the difference… meaning you now need to refill the reserve. Additionally, since tax/insurance went up, the size of the new reserve also went up, again increasing the amount needed to refill the reserve.

Once the reserve is refilled, your payments will be reduced somewhat. If the estimates were too high, you’ll be paid back the excess.

This is normal and expected behavior for every mortgage that uses an escrow account.

It is depends on state, some states NY, CA, OR appraise based on purchased price

Zillow puts it at about $112,000 more than what we bought it for in 2020

I think that $1100/$1500 is the annual premium, and the monthly amount is going up by $600, annually $7200. It would mean property taxes went up $6800

I cannot wait to call the servicer to sort this out

I do live in one of those states

Probably what's happening here, $600 a month just seems excessive

This is a perfect explanation, also the escrow company will a times require a "cushion" in the account. Like explained above your payment will normalize once they hit the target amount with cushion. Happen to me last year

Any chance you have Mr. Cooper as your loan servicer?

Nope

Contact loan officer, 600$ per month sounds steep, 600 per 6 month okaish

This is why I always pay property tax and insurance myself, it’s a hassle dealing with the escrow account

I'm amazed how many people purchase a home and don't understand how property tax and insurance are paid.

Insurance going up everywhere

Remember that when you get hit with a shortage, you get "double charged". You have to pay more for being short the past year, and pay more again for the larger amount going forward.

Do you think it makes sense to try to pay my own taxes and insurance, or just deal with the escrow account?

The tax increases are not in the 30 year amortization schedule in my mortgage agreement, it's not obvious to a new homeowner. $600 a month increase feels extreme to me.

Just deal with the escrow account. It'll likely just be $600 a month more this year. Then it will go down by about $300 a month the following year.

Property taxes aren't amortized. Loans are. You really don't seem to have even the slightest clue how this all works. Did you not understand that property tax is a thing? Insurance is a thing?

escrow account is insurance and property tax. Those went up, for a while you were paying the old rate with your payments and now the escrow company is correcting that by upping your monthly payment to not only account for the higher taxes and insurance but also to pay back all the payments where you had underpaid prior.

$4000 is the underpay and $250 a month is the increase. The $600 a month is to pay $350 towards that $4k every month while covering the $250 increase. Having a $4k underpay off a $250 increase would suggest that the increase happened 16 months ago and the escrow company only now caught it.

A $250 a month increase from prop tax and insurance is not at all outside of normal but yet does seem to suprise first time himebuyers. Yes, the cost of your house will go up over time.

I know a lot about other types of lending but not mortgages. The payment on a fixed rate student loan never changes. I assumed mortgages worked the same, but learned that was incorrect when my monthly payment increased $30 in the second year.

A $600 increase seems really steep for me. Wouldn't you be surprised if your housing payment increased by $600?

You don't even know if it $600 a month for x months yet. You need to get that info. Again, it is your responsibility to understand what you are getting into when you buy a house. Did you not understand the concept of property tax? How are roads maintained? How are schools funded? How are the police paid? How about libraries? Where do you think that money comes from.

You should get your tax bill and insurance premium in hand before calling.

[removed]

Let me guess…citizens?

Nope

Also, please understand the majority balance for this escrow amount is property tax + home insurance; any one of those could of increased. It’s not smoke and mirrors though, your mortgage provider should give you access to the exact calculations used to determine the estimates escrow amount. And although you might find it unlikely, it’s very possible your property taxes doubled (Mine did two years ago); up and coming cities do this to generate revenue

I do, just curious what your comment is on this (FWIW they just sold my loan (after about 3-4 years) to a different company starting next month)

350 x 12 is $4200. So you can pay a lump sum or add it to your monthly payment.

The way my city does taxes, it makes our escrow payment "swingy." We pay quarterly payments but they only set the new rate after 2 payments are paid. So suppose one year my property taxes are 10K and the next year it's 12K. In the 12K year we pay 2500 for our first 2 payments, then we've only paid 5K toward 12K total so it gets raised to 3500 for the next 2 payments to get us up to 12K for the year. At that point our mortgage company thinks, oh, your taxes are now 14K per year (3500 per quarter) and they raise our escrow payment accordingly. It all works out in the long run, but because escrow tries to bank several months worth of payments in advance, the cash flow on it is weird.

If it was your home insurance that increased, you should be able to shop around for a different home insurance plan that might be more affordable (as long as it meets your mortgage/state/local requirements). I was able to save almost $100 a month doing that.

Also, consude bundling your car and home insurance as that could also save you some money.

You can also try to appeal your tax valuation if you think it should be lower. Remember that the government bases the value of your home on what they can see on the outside and what other homes are selling for, which may not always be in line with your home’s value.

Your may not qualify for a tax break the previous owners did. This would boost your taxes owed and short your escrow.

Also, if your state has a homestead declaration program to assist in taxes, and you didn’t file, that would also boost your taxes and short your escrow.

Regardless, they will even out next year and should maintain barring assessments/tax hikes.

There are many mortgage lenders which require you to have insurance, taxes, etc managed through an escrow account and do not give you an option to pay taxes and insurance by yourself.

[removed]

If there's an adjustment on escrow the lender should of sent you paperwork regarding an escrow analysis, whether if you have a shortage or a surplus and a total breakdown. This year I had a surplus, they issued a check and lowered my total mortgage cost by $19 a month.

I personally hate escrow accounts because of the buffer, they are essentially holding onto your money.

It's not hard to open a separate bank account and deposit enough each paycheck to cover the cost of insurance and taxes when they are due (assuming you have enough equity to get rid of it)

It depends on how well you track your finances, your level of discipline (will you in fact budget 1/12 of your property tax every year? Will you budget extra in case your insurance goes up?

I just stopped my escrow account because I can handle it, and I like being responsible for paying taxes when I want to and not worrying that a third party is going to mess them up. But I've done this all before.

In my state, the purchaser is responsible for the "supplemental tax," where the property tax assessment is "trued up" on the purchase price. The escrower only pays the regular, secured property taxes out of escrow.

Occasionally buyers here are surprised by this. I had to pay 6 months of stepped up tax basis on my own after buying, but I knew it was coming and had budgeted it. Then you know how much your property tax will go up every year, thank you Prop 13. . .

Get a copy of your tax bill/statement. You could have increased assessments and/or new bonds that recently were voted and passed. That coupled with possible insurance increases and the escrow cushion could add up.

You didn't say excessive compared to what. We don't know if you have a $1500 mortgage payment or a $5200 mortgage payment.

I’ve never escrowed. I just budget my own bills each month and the county mails me my tax bill.

Now does that $7000 check hurt to write. Maybe. But I saved it each month in a separate account so it didn’t hurt this month’s budget.

Yeah, it sucks. They reassessed property taxes a year after I bought my house and the valuation went up like crazy and boom, had to increase my payments to up the escrow account.

Property tax

Insurance

Both have likely gone up.

Get some insurance quotes. There may be a better deal out there.

Taxes: go to your county assessor's website and see what the property taxes are and you can also see the history of that.

They’re a terrible servicing company. They tend to make a lot of mistakes. A lot of times they fail to collect escrow correctly which can lead to large shortages. They also have a tendency to fail to actually pay taxes and/or insurance. This leads to a headache as you then need to contact them to fix it and a they’re hard to contact and work with.

Just don't be rude to them because you didn't understand. Yes it's an alarming increase but as every comment has indicated, completely normal and expected that there would be a change

This exact thing happened to me last year. My mortgage company (BOA) did an annual escrow analysis and increased my payment by about $600. After a year, my payment readjusted back to near the original amount.

Almost sounds like this was new construction and the previous taxes were based on the land value and not with the house built on it. Now that there’s a house, the property was reassessed so the annual taxes are higher.

Personally I don't have an escrow account and I prefer it this way. Some banks will penalize you for not using one by raising your interest rate or charging you a fee but fortunately I don't have that problem. I have a high yield savings that I put money in each month to cover the taxes, which is like an escrow account, but I'm in control of it and I get to keep the interest. I hate the required buffer - I do have a buffer but it's not as big as the back requires. Also my last house I had an escrow and the bank paid my taxes twice (because I refinanced, I was required to pay the next year's taxes up front at closing. Then the bank paid them a second time). It was a huge pain to get it sorted out. So I like having complete control over how and when my taxes get paid. I know some people don't have the discipline to save the right amount of money over the course of the year and not touch it, but I do and I'm a better steward of my money than my mortgage company.

Check your mortgage agreement - it may require an escrow account.

The only thing you could really do to combat this is shop around for a new home insurance policy. Can’t do anything if your taxes have gone up but if your insurance has increased you can call around to an insurance broker for a cheaper rate

Not surprising. My calculation for estimated cost to rebuild went from 500K to 800K.

My insurance agent told me all the companies are rebalancing that because cost to rebuild has gone up so much.

The same thing happened to me. Freaked out doing the math and trying to figure out where the extra charge was coming from. Talked to several people, made phone calls, talked to bank, called the bank etc. Couldn’t figure it out, made the first higher payment, then the next mortgage payment was back to normal. Concluded that the escrow account was short $600, and instead of the mortgage company saying that, they sent us a $600 increase mortgage bill. Not sure if your situation is the same, but it sounds very similar.

Your escrow account covers your property taxes and insurance. Double check, but your taxes likely went up. They didn't go up by $7200. When they paid your last taxes, the account was short b/c the taxes went up. So they paid the taxes in full, and you owe them that difference. They also re-calculate the payment so that you won't be short the next time taxes are due. So your payment goes up by the new amount needed, plus the past due from the last tax payment. Typically, you can contact your lender and pay back the past due in a lump sum so that your monthly payment won't go up by as much. But contact your lender to verify.

Tldr, your payment went up b/c your taxes went up. Your payment went up enough to cover the new tax amount, as well as your past due from the account being short for the last payment. You don't get a freebie on the shortfall from the last payment.

It almost never makes sense to pay your own taxes and insurance while you have a mortgage servicer, just for the sake of convenience.

[removed]

Does your county have different tax rates for a home that the owner lives in versus a home that the owner doesn’t live in? My county does, but you have to apply for the lower owner occupied rate, fill out an application and provide documentation. If you don’t do this you get charged the higher tax rate as if it a second home. You need to get the property tax rate sheet from previous years and compare it to the most recent one to see where the difference at.

Mentally, you're combining your mortgage portion of the payment with the escrow portion. They are separate, and that's why your total monthly payment can fluctuate if you pay them together. The actual mortgage terms didn't change. The portion of that payment going towards the mortgage isn't changing. When you pay taxes and insurance in escrow, you have them tacked onto your mortgage payment. So if the taxes or insurance go up, that add-on amount goes up accordingly. Contact your lender and verify why they saw a shortfall. Did your taxes go up? Did your insurance? Both? Did they send you an escrow analysis with this notice, which would be the typical process? If so, what does the analysis show? Where is the account projected to be short?

Your lender doesn't control your property taxes or insurance rates. There is no way for them to guarantee those items in your mortgage agreement. If you don't like the idea that the escrow portion will fluctuate, then pay your taxes and insurance separately from your mortgage.

Very normal.

My mortgage payment increased 32% from year1 to year2 because of an escrow shortage + tax increase. Is not fun!

Did you do a new build if so they can estimate the tax as land only and the county takes a year or so to catch up and your property taxes increase.

When we bought our first house we specifically opted to pay taxes and insurance ourselves. I already pay other bills and our car insurance and home were bundled anyway. On our current house, we're paying insurance ourselves. We had to be at a higher percent down in order to pay taxes ourselves (we already put 20% down but I believe the bank required 30%). If you feel you can handle it then sure but you still need to discuss the specifics with your bank.

Find your last escrow analysis, or log in on line and find it. Check the amounts of your homeowners insurance and property taxes, one or both has gone up enough to require that increase in your escrow.

They should be mailing that to you and it's a good idea to look at those amounts every year. My mortgages always gave me an option to pay the amount needed to keep the escrow account above its minimum, if I wanted my monthly payment to stay the same.

This same thing happened to me. So glad I underbought. Something you can do is pay an amount to get the escrow balance up higher so your monthly payment stays the same or close.

We'd heard too many horror stories of insurance and property taxes not being paid correctly. We also used to get a small discount for paying our property taxes "early" so we never did escrow. So far it's been fine. The insurance is paid online at the same time every year and they send us a tax bill which we also pay online. That was there is no "slush" and we can use the extra money for other things.

If you live in Florida, homeowners insurance for most has doubled or tripled.

The house was built 80 years ago

Check if your insurance went up for no reason and see if there’s a better rate.

Nope, house is 80 years old

Well, there goes that idea. Any chance your property was reassessed? In my county, they reassessed all properties recently for the first time in 20+ years. Some properties saw significant changes in their taxes as a result of this. I’ve heard some places will reassess upon the sale of the property which can cause severe changes if the property hadn’t sold in a long time. Depending on where you live, Zillow can be a good resource for determining historical taxes and assessed value.

So, you need to get the property appraisers annual assessment notice. You should be getting one every year. This will outline the projected value of your home and the projected increase (or decrease) in property taxes.

Ours went up 33%. Yea, it sucks but it is what it is. I flipped that into a new homeowner's insurance policy with a different provider, more coverage and it saved me about $110/month.

You also should shop around for homeowner's insurance. You never know what you might find.

Likely property taxes, but also shop around for new homeowners insurance. When I was with liberty Mutual they just seemed to crank it up a certain % each year. The replacement cost of your house goes up when cost of materials goes up. We found a more "rural" insurance company to help bring that down.

By chance are you in Florida? Homeowners insurance in the state has virtually doubled overnight for many people and there's been quite a number of people who have lost coverage due to insolvency of the insurer or just non-renewal could it be that they replaced your policy without informing you?

[removed]

Savings interests, plus got 2.6ish % cash back using my CC.

$600 is a lot but this happened to me as well, definitely a shock when it comes through. My payment went from ~ $1500 to $1900 in one month. Thankfully it is beginning to go back down.

Mine went up $400. The reason was that the previous owner was old enough to be exempt from some of the taxes. When the taxes went back up (I am not old enough to be exempt), the mortgage company did not increase the amount in escrow. So they had to jack it up to pay for the taxes they forgot to pay. Next month it should go down to what I was originally supposed to pay.

Just mentioning this in case yours is a similar reason.

Escrow is bad. I earn the interest and manage my own money.

Double check that you are current on your water, sewer, trash bills or any other services that may by handled by your municipality. In MA if you are delinquent on these types of bills the municipality will eventually add it to your tax bill, the mortgage loan servicer will pay it and will factor it into your escrow.

Depending on your state there may be some exceptions you can apply for the taxes. For example in Texas you can claim your primary residence under the homestead exception that takes a big chunk off the taxes.

Also you may want to shop around for homeowners insurance. You will be surprised about how much of a difference it can make.

In the beginning of my mortgage, first 2-3 years, they couldn't properly predict my property taxes (sometimes predicting $0 in a quarter) and had wild swings in escrow amount. Started with a $6000 refund year 1, then lowered the monthly amount, then went high with a $400/month increase.

Next year it should go back down a bit and settle out for the future.

If you are surprised, you need to track your own tax bill better. many of us have gotten bit by this.

You may be required to have an escrow account, particularly if you're below a certain percentage of equity in your house. Lenders want to make sure that insurance is being kept up to date and taxes are being paid on properties that they have a significant amount of stake in.

But if you're allowed to drop it, then you may want to, assuming that you're organized enough and financially disciplined enough to weather a big tax payment every year instead of monthly installments. Your insurance company may give you a discount by paying your premiums annually rather than monthly, which you typically won't get when paying via escrow.

You can also dispute your assessment if it went up that much.

$3400 to $4000

Same situation except the shortage is $4,000 so my payments will be higher for all of 2023

We do ours because we figure we're less likely to fuck it up and not even know about it compared to having the bank do it.

You have to be very comfortable with cash flow (we just pay insurance premium annually and property tax quarterly.) If you think you'd want to budget and divide it all into 12 monthly payments that's probably more hassle/risk then just using the escrow.

Also your mortgage may require escrow so you'd have to check that out.

Taxes and insurance have gone up, so your escrow account needs to be funded properly to be able to pay these increases.

One thing I noticed with Progressive home insurance when I bought my house the first year rate was decent then doubled the next year. No change in coverage. They hope you done notice as it is paid thru escrow. Make sure you're reviewing your home insurance policy renewals.

Check your county tax records and see what your past and present tax assessments were. With the increased in home values my assessment jumped $200k in one year. You should look at that and if a chance to appeal with the county you should. I opted not to have an escrow so I know exactly what my property taxes and insurance is.

Depends on what your taxes and insurance is. You normally have to have around 20% in equity before you can remove an escrow. I don’t have one and have to set aside $800 a month to cover taxes and insurance.

Same with me !!! Tewksbury Mass. 1st year $30 increase a month. 2nd year $200 a month! Hope they never reassess again for the next 30 years

Your insurance probably lapsed without renewal and they gave you a lender placed plan at a much higher premium; causing your escrow to go through the roof.

Same thing happened to me. The miscalculated or you may be in a new piece of land so they had you paying land taxes not property taxes.

Every time I receive notice an insurance increase or property tax increase, I take the difference from last year and divide by the number of months left in the year. That’s my extra escrow payment to ensure I don’t come up short.

OP, do you reside in Texas by any chance?

Have any idea what your annual property tax is? The size of the payments indicate your home is valued probably around $800,000? Depending on the mil rate set by city/county/state. If you are in New York its about 2% which would be $16000/yr.

Yeah, with mine it turns out they hadn’t assessed it since the EIGHTIES.

I do not understand this.

Did you buy a property that increased in value 200% or something in two years? If so, bully for you, well done.

How can a mortgage lender NOT charge you the correct property tax/escrow? It is not like it is a secret to them.

This is why you pay your 20% in equity so you do not have to deal with escrow/PMI.

Property taxes and homeowner's insurance rates change yearly. It's impossible for the lender to proactively predict how much it will change. When the bill comes due, they pay it. If rates went up and the escrow account is short, they cover the shortfall, and adjust the escrow payment to make up for it. If people don't like it, then don't pay those bills via escrow on your mortgage. Pay those bills separately on your own. Then the mortgage payment won't change.

This has nothing to do with putting 20% down and avoiding PMI. PMI is completely separate from property tax/insurance escrow.

>So they had to jack it up to pay for the taxes they forgot to pay.

How did they forget to pay it? When you got the mortgage, they based the escrow balance needed by what the previous owner was paying. When it came time to pay the bill, the escrow account was short, because your tax bill was more than what was estimated. So they covered it, like an overdraft at the bank. The next year, the payment went up to cover the 2 parts. One part was paying back the overdraft. The other part is building up the escrow account to be enough to cover the next bill. Generally, they send you an escrow analysis and give you the option to pay back the overdraft in one lump sum up front, so that your monthly payment only goes up enough to cover the next tax bill.

Exactly. Except I had to contact them to find out why it went up. Next month it goes back down by about $200 because they have caught up.

So your lender didn't send you an escrow analysis and notice that the monthly payment was changing? That would be the typical process. But maybe they didn't send it, or it got lost in the mail. Normally you get a notice in the mail telling you that it's going up, and they give you the option to pay the shortfall in a lump sum to avoid it going up as much.

Bought at 500 in 2020 and Zillow currently estimates it's 610. Looking through some old mail it looks like for taxes they used something like 400 as the figure last year, since this house has been in the 400s until 2020. I'm guessing taxes have been reassessed.

That's likely what happened

I despise escrow. I got my property tax bill last month but it isn't due until January. I sent the bill to my servicer. There's enough in escrow to cover it. But they won't pay it until it gets closer to the date. It drives me nuts! It's my damn money! And it's ME who is on the hook if the payment is late. Seriously WTF!?