Minutes ago I checked my email and I had a notification from Chase saying an escrow analysis had been done and my house payment is going from $607/mth to $736/mth!!!

I know escrow takes insurance and taxes into account, and I had small changes at my last house, but this is...21% increase!?!? I do not understand this at all!

Call them, it's all automated and any change triggers a 'healthy' (for the bank) response. Someone in the loan department can likely fix it pretty easily - but I don't have experience with Chase.

Did a little digging on the bank app. Looks like my home insurance went up by $50/mth but that still doesn't make much sense numbers wise. There is also something called escrow shortage/surplus that went up $80/mth and I'm guessing those two make the $130/mth.

But what's that last one from?? So my insurance goes up but the shortage/surplus ALSO goes up even more than the insurance??


Bank says I can pay a little over a grand and my payment stays the same, but even if my insurance went up at the beginning, that's $600 for the year, not $1000.

If your taxes and insurance only went up 21% this past year count yourself lucky. We got re-assessed and my taxes went up 40%. My insurance was about a 15% increase. All despite no improvements to the house, and never having an insurance claim. Those bills were quite a shock this year. This economy sucks.

Make sure it's not a fraud email, especially if they are asking for $1K to keep payment the same.

When we have a shortage in our escrow, our lender sends a notice with two options:
- pay shortage up front, and our payment stays the same
- increase escrow portion of mortgage payment, increasing monthly payment

We pay the shortage up front, as they seem to want plenty extra to cover it monthly (as mentioned above).

Also, we make sure to log into the bank without clicking on links in email.

quote:

Originally posted by AllenInAR:
Did a little digging on the bank app. Looks like my home insurance went up by $50/mth but that still doesn't make much sense numbers wise. There is also something called escrow shortage/surplus that went up $80/mth and I'm guessing those two make the $130/mth.

But what's that last one from?? So my insurance goes up but the shortage/surplus ALSO goes up even more than the insurance??


Bank says I can pay a little over a grand and my payment stays the same, but even if my insurance went up at the beginning, that's $600 for the year, not $1000.

My theory, there is a set % of 'surplus' required - say you $1k insurance & $1k tax due every 6 months, you need a minimum of $X in your account at T - Ymonths. Your increase was logged right after a payment, so the recovery will be steeper than reality for the 1st year. If you pay it & things don't change next year, it will show as over & your payment will be reduced.
Banks are always going to make sure they have enough of YOUR money in THEIR wallet to cover the known & a little extra. That's the price you pay for the privilege of them owning your house.
I'm not as bitter about it as that sounds, just stating the situation pretty candidly. A lot of people don't realize that a lot of the 'cost' of housing has nothing to do with housing.

quote:

Originally posted by rizzle:
Make sure it's not a fraud email, especially if they are asking for $1K to keep payment the same.

This was literally my first thought, and after reading the email, I went straight to my app.

So that increase in the shortage/surplus is just a bank thing "just in case"? That sucks. This is only the second house I've ever owned, and I was used to seeing small (under $10/mth, both up and down) fluctuations with the first one. This one was a bit of a shocker.

After one experience with escrow 35 years ago I swore them off forever. If the mortgage allows it just get rid of it. Set up your insurance on monthly and just pay the property taxes etc as they come due.
There is zero intelligent life in a bank escrow department. You will experience nothing but significant frustration in dealing with them.

If the mortgage doesn't allow it I'd be looking to replace it with one that allows you the control.

What about just paying your bank the loan payment then paying property tax and insurance yourself?

quote:

Originally posted by Powers77:
After one experience with escrow 35 years ago I swore them off forever. If the mortgage allows it just get rid of it. Set up your insurance on monthly and just pay the property taxes etc as they come due.
There is zero intelligent life in a bank escrow department. You will experience nothing but significant frustration in dealing with them.

If the mortgage doesn't allow it I'd be looking to replace it with one that allows you the control.

Exactly what we did about 15 years ago. I pay my taxes and insurance directly to each party myself..what we learned is that the banks will ALWAYS error to the side of covering themselves, meaning you most always will pay the bank’s escrow department more than what is required, then you end up with a credit at the end of the year to manage going into the next year.

quote:

Originally posted by AllenInAR:
There is also something called escrow shortage/surplus that went up $80/mth and I'm guessing those two make the $130/mth.

But what's that last one from?? So my insurance goes up but the shortage/surplus ALSO goes up even more than the insurance??

Check your current escrow balance. It’s likely a negative number. That second number is repayment of the loan the bank gave you to cover the current taxes and insurance. It’s just you paying them back. In other words, your insurance and taxes were much higher than projected in the current year. Also, they’re trying to build a larger cushion so you’re covered in the current year, anticipating additional increases.

Shop for new insurance and appeal your tax assessment. That’s how you reduce that escrow payment.

quote:

Originally posted by sigcrazy7:
Check your current escrow balance. It's likely a negative number. That second number is repayment of the loan the bank gave you to cover the current taxes and insurance. It’s just you paying them back. In other words, your insurance and taxes were much higher than projected in the current year. Also, they’re trying to build a larger cushion so you’re covered in the current year, anticipating additional increases.

Exactly this.

Your taxes and insurance already went up for the stuff that was paid this year. Your current escrow didn't take that into account, because it's always calculated based on what was paid the previous year.

So your mortgage holder just floated you the extra money to cover this year's higher than expected payments. (Interest free loan!)

But now you not only need to pay extra towards covering next year's higher taxes/insurance (now that they know about it), but also to pay back the negative escrow balance from them covering this year's higher than expected stuff.

That's why the escrow payment increase is higher than just the tax and insurance increases. It's also having to make up the shortage from this year. Plus build in a little bit of cushion for the likelihood of another tax/insurance increase next year.

My tax numbers haven't changed. It's just the insurance and the S/S number.

I'm gonna look into dropping the escrow account first. I suspect my insurance is gonna be pretty low since I already have several discounts being applied. But I'll try to drop by the office Monday to see what I can do.

Thanks all for the Barney-style breakdown.

Each year they do an analysis and you either get a bill, or a refund if they held out too much.
Since taxes and insurance don't often go down, the numbers reflect that.

If you choose to have the shortfall put into next years payment, you'll be paying the prorated part of the shortfall of last year plus the actual for this year.
Once you get back to even, the escrow should only be the amount of taxes and insurance each year (sometimes homeowners assoc. fees may be in there too).

When I was in the biz, banks who allowed escrow waiver charged 25 bps for it. If you have big T&I amounts and plan to stay in the house a while, paying the fee is well worth it to keep your money working for you in your own account. I don't know if banks still allow that or what they charge for it.

Escrow is money they keep to make sure pay your taxes and insurance, to make sure there are no other liens on your property. They hold it. They pay your taxes and insurance for your property from the escrow account. They adjust your monthly payment each year to adjust for changes in your taxes and insurance. They earn interest on it, not you.

One problem is that they don't always pay your taxes on your behalf in the tax year you wish.
If you itemize deductions on your federal tax return, this can be a mess. And they sometimes make it a pain to get your escrow funds back when you pay off your obligation and close your account with them. They probably won't remind you, just in case you forget.

I just don't do escrow.

quote:

Originally posted by ridewv:
What about just paying your bank the loan payment then paying property tax and insurance yourself?

This. I did mortgages for many years and discouraged everyone from ever doing impounds. Or escrow.

Your bank likely has a number of months of reserves required. Since they need tk mail a check to your insurance company as well as prop taxes and they could be due at different times.

I’d highly encourage you to cancel the impounds with your bank and just pay directly to your county and insurance company.

Worst I saw was on a purchase. Sellers taxes were very low as they had owned for years. My client pays like 2mm and the city of San Francisco took over a year to reassess. Meanwhile our software could only go based on “existing” taxes. So when we get the new tax bill from city it’s huge and we have to account for the several months of overage. Poor lady was in tears. Nothing I could do and it was all correct.

Cancel and pay on your own if you can

The pot will always be right in the end.

quote:

The pot will always be right in the end.

In other words, they keep track of all this for you, charge a very small fee. For me it's definitely worth it.
Our homeowners' insurance with State Farm in California has at least doubled in the past few years, due to State Farm's exposure to losses from wildfires in California's poorly controlled forests, as well as arson, and homeowners' building houses more and more in high-risk areas. I talked to the agent as the personal property portion of our insurance far exceeds the value of the personal property. Nope, it's a formula based on the insured replacement value of the house. That, of course, has soared with increasing property values.
And if you don't like it, try finding another home insurer in California. We're just lucky we're not one of the thousands of policies canceled.