How much has your mortgage payment increased due to escrow?

[Anonymous]

I'm still trying to understand how this works, I thought my monthly payment would stay the same for the life of the loan but now I'm told if property taxes increase, escrow portion on the mortgage does too. My payment has already increased after just a couple of months in. How much higher can I expect it to go?

[Anonymous]

It should be roughly equivalent to 1/12 if your real estate taxes. That portion is just to pay your real estate taxes, so when they go up, the amount you escrow to pay them will go up. Most mortgage companies also like a reserve of 3-6 months of taxes in the acct at all times.

[Anonymous]

Escrow also usually includes your house insurance too. House insurance premiums usually go up each year. In MD, the property tax amount changes every three years and goes up when home values rise and can go down down if home prices go down (alough, usually, they just raise the property tax rate, so it is more likely to stay the same than go down.)

[Anonymous]

So this is only an issue the first year - correct?
From what I understand, after that first year, I start paying taxes separate to the mortgage payment.

[Anonymous]

Anonymous wrote:So this is only an issue the first year - correct?
From what I understand, after that first year, I start paying taxes separate to the mortgage payment.

Depends on your mortgage agreement. Some lenders require escrow for a certain period of time, some require escrow until the remaining balance is below a certain % of the assessed value, etc. Some loans have no escrow requirement at all. Read your mortgage to see what yours requires.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So this is only an issue the first year - correct?
From what I understand, after that first year, I start paying taxes separate to the mortgage payment.

Depends on your mortgage agreement. Some lenders require escrow for a certain period of time, some require escrow until the remaining balance is below a certain % of the assessed value, etc. Some loans have no escrow requirement at all. Read your mortgage to see what yours requires.

Thanks. I need to go back and read through it.
It makes no sense to me that after year 1 when I start paying the taxes, escrow can still increase because taxes do...even though taxes no longer come out of escrow?

[Anonymous]

Taxes will keep coming out. This is how you pay your property tax.

[Anonymous]

Yes , they raise taxes on you . They will also play games to keep taxes going up even during downtimes. It's bs and wish we had a homestead exemption in this area.

[Anonymous]

Ours has gone down. Our property tax went down so the escrow went down. And our insurance hasn't gone up that much. It is a little weird that we don't pay our taxes or insurance ourselves but that is how it works.

[Anonymous]

Just make sure they pay the right lot #. We discovered our company had been paying the wrong lot # with our escrow for years after we were served notice of our home being put up at auction. It was our first house so we didn't even know to look. We just assumed it was working.

It all got sorted out - after about 100,000 hours and countless calls to lawyers etc.

[Anonymous]

Anonymous wrote:It should be roughly equivalent to 1/12 if your real estate taxes. That portion is just to pay your real estate taxes, so when they go up, the amount you escrow to pay them will go up. Most mortgage companies also like a reserve of 3-6 months of taxes in the acct at all times.

That last bit is important, because they'll add that to the adjustment.

So, say your taxes go up $400 a year. Theoretically, your escrow should only go up $33.33 a month. But the mortgage company will also decide the minimum amount in the account is about $800 short, so it'll either ask you for the $800 right there, on the spot, or prorate it, so that your monthly increase is $100 instead of the $33.33. (BTW, they invest that money and don't pay you interest on it, which is really bad and one reason some people refuse escrow).

To the OP, I'm surprised you are surprised. Property taxes increase. Surely you understood that?

[Anonymous]

Anonymous wrote:Ours has gone down. Our property tax went down so the escrow went down. And our insurance hasn't gone up that much. It is a little weird that we don't pay our taxes or insurance ourselves but that is how it works.

Never hurts to make sure the taxes actually get paid, though.

[Anonymous]

Virtually all lenders will waive the escrow requirement and you can pay directly. I would never allow my lender to escrow and keep my money for a year.

[Anonymous]

Ours went up by $250 a month because our property taxes went up a bunch. Your payment can also go up when your homeowners insurance payment/premium goes up.

[Anonymous]

I pay my own, and then get a letter from bank that they "tried to pay, but has been paid already".