Mortgage Escrow Question

[sidmel]

I don’t know if anyone on this board might have a bit of advice. I have a loan (not sure if I can mention them per board rules or not) with a certain company. I just received a letter saying my escrow account is almost $1000 short for 2006 when last year I actually had a surplus. I checked my tax rates and any increase in my home insurance and found only a minimal increase. Now I find my monthly loan amount increasing by nearly 30% to account for this “shortage”.

Does anybody have any experience with this or suggestions? The only thing I get from the mortgage company is that, “Oh, we reevaluated you escrow account and that’s that.”

[Gruesome]

My mortgage company does that too. It seems they can never estimate the monthly escrow amount with any degree of accuracy. One year, I'm up...the next I'm down. It's a vicious cycle.

[Captain Kidd]

Check your properity taxes too. And yeah, my mortage pendulums between excess/shortfall.

[sidmel]

Yeah, I did. Between city/county property taxes and my insurance, everything went up less than $100 for the year, which is about what I expected... and planned for. Just not the rest!

[NEOWatcher]

I'm not sure of the formulas, but any little discrepency will make major differences, plus there are minimum balances to be carried on the escrow.

So, if you are $12 short of the year, the escrow needs to not only go up $1 per month, but needs to go up an additional $1 per month for covering the current year shortfall, and another $1 per month for the increase in cost. (or something stupid like that).

Things tend not to amortize well when you need to take in account changes.

And, scheduling is important. My escrow is based partly on 2 property tax payments per year. They paid one a few days early, which put 3 tax payments in a single escrow year. Therefore my escrow estimate went up around 25%, my balance fell below minimum a few hundred, and there was a 6 month shortfall of that tax. End result, my escrow portion of my house payment went up around 60%. Hopefully the reverse will catch up (and in the meantime the bank made interest on me)

[Trebuchet]

Sidmel, do you have an adjustable rate mortgage? If so, perhaps they didn't adjust the payments at the right time.

Otherwise, banks have certainly been known to play games with escrow accounts to make a few extra bucks.

[sidmel]

Yes and no. It's fixed for the first seven years, then adjusts after that.