Escrow shortage

We just got a notice from the bank that our escrow account was short, and in order to put it right it’s going to be either $2400 in a lump sum or another ~250 per month.  On top of that, our monthly mortgage payment ise going up about $100\.   I understand this can come from tax increases, and our insurance costs rose, though that was only by about $200/year.  This seems like a big bump.  Anyone seen anything similar or have any advice?

AstralOil

in Mortgage 12 years and 2 months ago

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brucef | 12 years and 2 months ago

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The formula that they use is forced by statute, so they don’t get a choice. You are paying for two new charges, First is to cover future (this coming year’s) expenses. Secondly you are being billed the shortfall that has taken place since the last analysis. Typically you are given the option to catch up that shortfall in a lump payment now. Once this arrears is taken care of, your monthly payment will revert to the old payment plus the adjustment form “First ” above.

AstralOil | 12 years and 2 months ago

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I’ll add it up – it may well be on target, as we got a new property tax assessment from the city, but since it seemed like such a big jump I figured I’d see if it was typical.  Thanks!

slopefarm | 12 years and 2 months ago

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Sometimes they only visit the escow charge periodically, so an imbalance can grow. Look at your taxes and insurance bills for the past year or two and look at the history of the bank’s payment of those charges plus any recent increase in the tax or insurance bill. See whether there is a discrepancy or not. You owe the money either way, whether ot the bank or directly to City and insurer, so the main goal is just to make sure they have the amounts of the bills correct and are not overbilling you with respect to the actual charges. Bear in mind they like to have a balance that stays about 6-12 months ahead of the bills. So the escrow doesn’t go into the red. Call them if you think they are overbilling, but do the math yourself first.